Secret Service Counters Nigerian Scams

Sept. 5, 2000 -- 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.

Letters are written on official-looking Nigerian government letterhead, faxes sent from places like London, money transferred to legitimate-sounding places like Hong Kong. The scam operators dress up and play the part of government or military officials in face-to-face encounters. Computers often are used to forge documents.

In one recent instance, a scam letter was written on stationary appearing to be from the U.S. Embassy in Nigeria.

“Some of these guys can really put a fairly convincing letter or fax together,” says a Commerce official.

Nigeria is a former British colony, and many of the scammers speak and write English, so these rip-offs commonly target people in English-speaking countries. Elaborate laundering operations funnel the money around the world to buy goods for sale back in Nigeria. In many cases, accomplices in the United States and other countries help the perpetrators, officials say.

The Nigerian government has blamed the rise in scams on the country’s problems of decades-long mass unemployment, extended family networks, the age-old thirst for a quick buck, and the greed of foreigners.

Throwing Good Money After Bad

The scammers are so good, some victims are strung along for months and spend thousands of dollars, unwilling to believe they’ve been taken.

“It’s like being a gambler, who throws good money after bad — the deeper you get in the more reluctance you have to back out,” says Caldwell. “It’s not unusual that we have seen victims lose more than $1 million.”

“Once people get hooked, my experience is they become more and more resistant to accepting that it’s a scam, because they become vested in the deal,” says a Commerce official. “It’s almost like … denial, they don’t want to believe that it’s not true.”

Many times a family member or friend of a victim will ask authorities for help. When the bureau receives the information, they try to talk the person out of becoming victimized or subjecting themselves to further victimization.

“We’ve done that quite a bit, where we’ve talked people off a ledge, so to speak, and got them to come around and believe they’re victims,” Caldwell says.

“We’ve gone so far in the past to actually pull people off airplanes,” he says. “We’ve gotten to these people and pulled them out of potentially either harmful or certainly cash sensitive situations and gotten them out. We’re really quite proud of that.”

But, he adds, “Clearly some people never ever come to the realization that they’ve been a victim to a fraud, and think that one more payment and their windfall is going to happen.”

Nigerian Scam Chronicles

The 4-1-9 scams come in a number of varieties. An Oregon man named Brian Wizard in July published a book about his experiences with Nigerian scammers, in which they worked a bizarre 4-1-9 variant called, Black Currency Scam.

In his book, Nigerian 419 Scam, Game Over!,Wizard describes how Nigerian cons proposed he pay $8,000 to help them buy special chemicals to “clean” a suitcase supposedly full of illicit U.S. $100 bills, and another $2 million in a vault.

Meeting in a hotel bar in London, the Nigerians told him each bill had a smudge on its face that would prevent detection by a scanning device as it passed through U.S. Customs.

“They just tell you their story about why they need your money,” says Wizard. “They needed to buy the chemicals, and they just happened to be out.”

Wizard says he spent $4,000 total to play along with four different scams.Now he hopes to recoup his losses with the book. Altogether, he says he was promised $32 billion.

For souvenirs, he has a swath of forged and faxed documents. They include a certificate of ownership for $25 million in a security vault in Benin, various diplomatic papers signed, stamped and approved, and a “get out of jail card” that says the money he would be getting was free of money laundering or drug money.

“I’m thinking, cool, wallpaper,” he says.

A rare, more sinister variant seen primarily in Europe is the Threat Scam. Victims are sent “notifications of assassination” from letter writers purporting to be from an international security service that has received information that the letter’s recipient is about to be kidnapped and murdered.

How do you get these mystery murderers off your back? Pay thousands to the security service, and they’ll take care of it.

There is no evidence the threats have ever been carried out, says a State Department publication.

Spreading the Word

Many victims who realize they’ve been taken never report their losses to the authorities out of embarrassment or fear they’ve violated some U.S. law, officials say.

U.S. authorities have published materials encouraging people to report suspected advanced fee fraud scams so they can target the criminals and try to prevent others from being taken. The U.S. Department of Commerce has a hotline available for discussing possible scams.

“We get on average at least one call a day from a U.S. company, trying to find out whether these things are legitimate or not,” says the Commerce official. “About 90 percent of the time we determine that it is not legitimate.”

“If it’s unsolicited, and large amounts of money are connected to it, and it’s a confusing letter, it’s almost certainly a scam,” he says.

Which is not to say that 90 percent of all offers coming out of Nigeria are not legitimate, says Edward Casselle, Commerce Deputy Assistant Secretary for Africa.

“Most Nigerian companies are honest and legitimate entities, but unfortunately, a small number of ‘scam artists’ operating out of Nigeria tarnish the country’s image as a place to do international business,” says Casselle.

To help U.S. companies avoid the bad apples, the Commerce Department also offers U.S. companies a market-research service called International Company Profile, which checks the bona fides of Nigerian individuals or companies or deals.

“I would like to think that we’re having an impact on this, in the education arena. But on the other hand, we’re not seeing any decline in it, in terms of victims,” says Caldwell.

For counseling about possible 4-1-9 scams, call the Nigerian desk officer at the U.S. Department of Commerce at (202) 482-5149.