I am very glad he was found out and investigated by authorities ultimately leading to this, but reading the article I can’t help but wonder:
It’s interesting that this one guy gets 24 years over 47 million dollars. Yet, not a single executive, board member, VP or SVP got arrested for the fraud that lead to the 2008 crash. We are talking orders of magnitude more than this and they declined to prosecute even though the evidence was absolutely abundant as we now know.
This guy doesn’t deserve any sympathy but it should be known that he’s hardly the most egregious financial criminal walking the streets. That honor goes to Jamie Dimon of JP Morgan Chase.
edit: at the very least, they should have fired all the executives from the banks, and their boards, and stripped them of their compensation packages, and clawed back anything they earned in that time period, and banning them for life from working in the financial sector in any capacity ever again. That would have been more appropriate than jail time and sent an actual message to Wall Street that this behavior won't be tolerated.
They paid $13 billion in fines for their role in underwriting fraudulent securities[0][1] as it was coming to light. In a brief that was never filed as part of the settlement (JP Morgan Chase really didn't want this to be filed and made it a contingency for the settlement), made public after the settlement and summarized in the statement of fact released along side the settlement itself[2], the government had enough evidence that it was going to file a lawsuit, the core of which was related to this:
>for a fraudulent and deceptive scheme to package and sell residential mortgage-backed securities that the bank knew contained a material amount of materially defective loans.
If that's not enough, if we want to look just beyond 2008, they pulled a scam to manipulate the part of the settlement which was suppose to 4 billion in loan relief for home owners[3] by forgiving phony mortgages.
I have more, if so desired, but I didn't want this to turn into a hundred link dump of information that would be very dense to read.
As long as you have the money in your coffers to pay for any wrongdoing you'll never get charged. These fraudulent securities in 08' were also somewhat removed from depositors so it's hard to see too many similarities to this case of a local bank.
Robosigning, directing employees to sign fake names on contracts and repeatedly submitting fraudulent statements to the courts, among other things, in a largely successful effort to steal people's homes on a mass scale.
>Reuters has found that some of the biggest U.S. banks and other "loan servicers" continue to file questionable foreclosure documents with courts and county clerks. They are using tactics that late last year triggered an outcry, multiple investigations and temporary moratoriums on foreclosures.
>In recent months, servicers have filed thousands of documents that appear to have been fabricated or improperly altered, or have sworn to false facts.
Reuters also identified at least six "robo-signers," individuals who in recent months have each signed thousands of mortgage assignments -- legal documents which pinpoint ownership of a property. These same individuals have been identified -- in depositions, court testimony or court rulings -- as previously having signed vast numbers of foreclosure documents that they never read or checked.
> But then you have to ask if the institutions doing the application verifications were criminally negligent.
That wasn't negligent. It was intentional.
Not by the institution, but by the officers acting against the interests of the institution.
A tiny example out of so many: it is against the interest of a secured lender to inflate appraised value or allow them to be inflated.
Yet, starting at 2004, appraisers across the country started reporting that they were being pressured to inflate appraisals and blacklisted when they refused.
This is clear indication of fraud against the institution and regulators. There is simply no honest reason to inflate appraisals.
> Not by the institution, but by the officers acting against the interests of the institution.
The institution made a bunch of money. In the ghoulish way banks behave, the institutions interests are only making money. The officers were acting in the interest of the institution the way they understand them.
I believe a similar concept exists in finance, as part of fiduciary duty. It's called duty of care in that context.
"The American Law Institute’s Principles of Corporate Governance defines the duty of care as the duty by which a corporate director or officer is required to perform their functions in good faith; in a manner that they reasonably believe to be in the best interests of the corporation; and with the care that an ordinarily prudent person would reasonably be expected to exercise in a like position and under similar circumstances (negligence standard)."
Again, that's a civil issue not criminal. In theory some lenders might have been able to file civil lawsuits against some of their own employees to claw back part of their bonuses or whatever, but that would have been pointless.
You're right, it's civil rather than criminal, but in the case of some investment companies, like those that sold mortgage-backed securities, it can be enforced by the SEC.
That's just one example. I expect that, had they wanted to, the government could have found many applicable laws to go after those responsible for the financial crisis.
Should I understand that you think accountability for the fraudulent loan applicants was just a form of efficient markets under a broken institutional system?
They shopped around to different ratings agencies and only hired those that provided the better results.
You would need to classify everything from consumer reports to industry awards to not inviting influencers who give negative reviews to events as stealing as well.
Yeah, no. Credit agencies weren’t hapless victims of market forces.
> Another email between colleagues at Standard & Poor's written before the bubble burst, suggests awareness of what would happen to the securities they were giving top ratings to: "Rating agencies continue to create and [sic] even bigger monster--the CDO market. Let's hope we are all wealthy and retired by the time this house of cards falters."
They were willing participants precisely because they were making huge fees to look the other way.
> One study of "6,500 structured debt ratings" produced by Standard & Poor's, Moody's and Fitch, found ratings by agencies "biased in favour of issuer clients that provide the agencies with more rating business. This result points to a powerful conflict of interest, which goes beyond the occasional disagreement among employees."
These kinds of things are deals negotiated at the highest level of the companies involved. Credit agencies were paid to give the crime the banks were doing a veneer of respectability.
> These kinds of things are deals negotiated at the highest level of the companies involved
To me it just seems a more or less natural outcome of the major structural flaws in the whole business model. I’m not sure you need an explicit conspiracy for credit agencies to begin behaving in such a way that maximizes their revenue, it was mostly just a natural outcome of competition and extremely useless and inefficient regulation. If anyone deserves to go to prison it’s the people who were supposed to be regulating the banking industry.
Obviously the Federal government had zero interest in doing that but if they only went after the bankers it would have quickly become obvious that they are not the only ones to blame.
“You don’t need an explicit conspiracy for pig butchering. It’s a natural outcome of competition in the black market and extremely poor security and training.”
If you can actually draw a distinction between what scammers do and what companies do other than “we explicitly have laws on the books to treat it as a crime” I’d love to hear it. There’s a lot of similarities between corporations and criminal organizational - it’s just groups of people who are trying to make money.
And as for who deserves to go to prison, the ratings agencies refused to pay market rates to retain talent being poached by the banks. The same happens in government. So basically the banks continually poach the best people and create incentives to keep the status quo and for regulators to turn a blind eye so that they can land at the bank later. You can go after the regulators but I don’t think that’s going to be an effective strategy to solve the problem.
> You don’t need an explicit conspiracy for pig butchering
Yeah but IMO the scam part is mostly tangential. It hardly matters what did the CEO do with the stolen money, he could have gambled it away at a casino or bought a yacht with it, at the end of the day he still stole it and that’s the crime we’re discussing here.
> You can go after the regulators but I don’t think that’s going to be an effective strategy to solve the problem.
Yes, but going after the bankers would have exposed the extreme incompetence by the regulators and if you started unwinding the whole thing it would have affected a lot of high level people in government. So it’s rather obvious that that they had very little desire to prosecute anyone.
And it hardly matters who deserves what since you can’t send anyone who was just exploiting loopholes and didn’t clearly brake any laws regardless how immoral or unethical their actions were.
Not outright bribes. Just the implicit knowledge among all parties that the rating agency that gives bad grades get fewer customers. Result is the same but not exactly "bribing".
Yea, probably there was invidual cases of bribing like in all industries. But overall the issue wasn't oughtright bribes.
It wasn’t just implicit. There was explicit acknowledgment of the problem and turning a blind eye precisely because they were getting paid by the banks. I don’t know how else to categorize that except as bribery - you’re literally paying money to influence the outcome which is the very definition of bribery.
IIRC, SCOTUS recently ruled that only an explicit quid pro quo is considered a bribe. So laundering monies thru multiple parties is a-okay and mutual backscratching, such as a gifting someone an RV and then coincidentally getting preferential lucrative judgements, is reciprocal altruism. Or something. Because vibes.
I know, I know. Requiring conspirators to say "this is a bribe" for there to be legal jeopardy is sort of nuts.
It’s not clear to me in 2008 that anyone committed fraud to the level required.
My understanding was more that things were disclosed deep in the fine print, and nobody really verified anything and didn’t have a legal obligation to do so.
Who allegedly lied to the point of it being fraud in 2008?
See my comment to a similar question that I answered already a few comments up from this one. If more information is desired, let me know, I have mountains of it, this is just the highlights to show in broad strokes the banks did indeed know they had fraudulent loans and they willingly misrepresented them.
Well, the people who lied on their mortgage applications to get loans they couldn't possibly every pay back certainly committed fraud. Nobody went to jail. Neither did anyone of the 100,000 or so people who collected the "first time homebuyers tax credit" fraudulently.
> VP or SVP got arrested for the fraud that lead to the 2008 crash. We are talking orders of magnitude more than this and they declined to prosecute even though the evidence was absolutely abundant as we now know.
Nor did any of the millions of Americans who lied on mortgage applications, and took out mortgages they couldn't possibly afford to pay back. Nor was anyone ever held liable for income tax on forgiven debt or the imputed income from living rent-free in houses for years until the court foreclosed.
If I recall correctly, the attorney general at the time (Eric Holder) told his peeps not to bring a case unless it was absolutely 110% rock solid. It was too much bother for them.
What seemingly happened is they used it to leverage a settlement out of the banks[0] as part of the negotiated settlement that landed in 2013 was the explicit removal of a brief that was to be filed to carry out a lawsuit of this nature.
I wish I knew why they decided not to pursue such a rock solid case, but by 2013 it seems they reversed course on being 'hardline' in dealing with the banks.
This still doesn't excuse the fact the executives and board weren't held criminally liable, or at the very least all fired and banned from ever working in any part of the financial sector ever again, and stripped of their golden parachutes and money clawed back that they made during the time period.
> It’s interesting that this one guy gets 24 years over 47 million dollars. Yet, not a single executive, board member, VP or SVP got arrested for the fraud that lead to the 2008 crash. We are talking orders of magnitude more than this and they declined to prosecute even though the evidence was absolutely abundant as we now know.
Can you show the abundant evidence that is available, and who committed the crimes you think they did and which specific crimes you think these individuals committed?
I replied to someone above with a similar question. And that is only the tip of the iceberg of relevant information I have on hand. If more is desired, please ask what you'd like.
- which specific people do you think committed crimes?
- which specific crimes do you think they committed?
- what evidence do you have of these crimes linked to these people?
- bonus question, given how mad the US was at bankers post 2008 and how hard prosecutors tried to link people to crimes, nothing came out of this, why did prosecutors fail to find any data to charge people?
the main difference is that Embezzlement doesnt come with the option of a civil settlement by a completely different enforcement agency, and also isnt hard to prove
Whenever I hear the term "pig butchering scam" I struggle to distinguish it from the plain term "scam". Like, as far as I can tell it is simply called "pig butchering" because of the imagery of fattening a pig before slaughtering it. But I feel like in the past we would normally just call it a "long con", perhaps.
This sort of thing has existed for a long time, but this term makes it sound like something that is new or novel. Feels like the media is doing a bit of... "headline engineering", here.
the term "pig butchering" originates in Chinese (杀猪盘), where this particular style of scam is often targeted at overseas people via WhatsApp. So "pig butchering" refers specifically to these scams run from China (or elsewhere in the region by Chinese operations), and it's what the scammers themselves call it. One of the distinguishing features is that they're often run by fairly large, organized operations with paid, trafficked, or otherwise long-term staff manning the WhatsApp personas. Similar to Indian call center scams.
Much like how "419" or "Nigerian prince" refers to scams coming out of a specific region.
I still don't get it. Is pig butchering a common phrase in Chinese to refer to scams? I believe the phrase, even in its original Chinese language, was only invented recently (Wikipedia says 2016). That doesn't answer the question of why this particular phrase was invented.
That being said it's not just Chinese people targeting overseas people. Chinese people are also often targets of pig butchering. The problem is so bad that a movie was made about it in China and earned $500M at the box office. Given that China heavily censors its media market, it is no secret who is doing what. https://en.wikipedia.org/wiki/No_More_Bets
I always thought it was because they are looking for big victims loosing a lot (fattning up the pig and then butchering it) vs scams stealing small amounts from a lot of people.
I think it's easy to think that the name is somehow descriptive of the mechanics of the scam (which tends to be how scams are named). But in this case it's more about the payout patterns. It is usually a relationship/investment scam, i.e. one where the victim is conned into believing they've formed a close relationship with a wealthy individual, who then offers them investment advice, pointing them towards a fake investment app.
Pig butchering is not just something that goes on in an abattoir, in many countries it's like a mini-festival. The idea is that in winter months each household butchers their pig, everyone turns up and gets fed. Then next week it's someone else's turn in the village to butcher their pig. Before refrigeration this was a great way to have meat regularly without needing to preserve all of it.
The image that this evokes in the minds of people that have experienced this is a big barbecue where various cuts of meat are feasted upon for a long time, maybe all day. It's a joyous event of unbridled gluttony. The guests must consume all of the un-preservable meat right away, which means if you attend one of these events you get to stuff your face with delicious, delicious pork for several meals, not just one.
To understand the origin of the "pig butchering" scam name, consider that most scams are one-offs. The scammer tricks the victim, the victim loses maybe a few thousand dollars, and learns "not to do that again". With pig butchering, the victim is tricked into feeding their money repeatedly into a fake "investment" application, which allows the scammer to "feast" on them for a long time, like at a pig butchering event.
Similarly, many long-cons take time to set up, but are still one-off thefts. That's not the same as convincing someone to repeatedly put thousands of dollars into the stealing machine.
Yup, the fattening of the pig is "fattening the scammer's wallet".
To gain maximum meat, you must keep feeding the pig, to gain the most, the scammer must keep the victim on the hook for as long as possible. The slaughter is the going all in to end the scam. Either by asking for all the remaining money if possible or terminating it when the victim is broken.
Pig butchering scams are characterized by some number of the following:
- Finding marks by sending out text messages which have the appearance of being a normal message sent to the wrong number, and which invite a response.
- Building a long-term relationship with the mark over text messages.
- Eventually convincing the mark to invest in a fake crypto exchange.
- The fake crypto exchange delivers small wins for a while
- Eventually convincing the mark to make a very large investment.
- Then the money disappears.
- The scam is run by Chinese operators in an illegal call center in Myanmar using human-trafficked labor.
This obviously has characteristics that distinguish it from a generic scam.
Example of a scam that is not pig butchering:
- I got a text message offering me $XYZ/day to drive around town with a Colgate toothpaste ad on my car
- If I had accepted the offer, they would have asked me to send in a downpayment for the ad materials, then they would have vanished
A new scam that I'm seeing is random text messages where the other person thinks you're a veterinarian, or play tennis (and they're oddly worded):
> Hello Manny. My customized tennis racket has arrived. I want to play a tennis match with you. I have a hunch that you are no longer my opponent. When do you have time?
I imagine they want to get you into a conversation and pitch a crypto scam.
It doesn’t have to be crypto. In Hong Kong it is more common as some gift cards or even straight bank transfers because average victims don’t know how to use crypto
I'm not upset, and I don't think your examples are analogous, since they all do have a specific meaning beyond "scam".
I think both things can be true - the term originated from Chinese and became a common term in that region for long conning people over the internet, sure. But, at the same time, the media has also latched onto its use largely for dramatic effect, even when there is no evidence the scammers are Chinese.
I don’t think that’s fair to say the person is not engaging content in a meaningful way. Have you read the article? It’s pretty clean cut aside from understanding who the perpetrators were. The ceo of a bank got conned and went to prison, and there’s emphasis on calling the con a “pig butchering scam”
Absent the etymology described in this thread, I would have had a similar confusion to theirs as to what distinguishes this scam. But now I know it's a regional term for it and I shouldn't necessarily expect a term with an obvious connection to how the scheme works.
It's called pig butchering because the scam relies on a long con where the scammer often "feeds" the mark with either real or fake small wins to entice them to provide more money to the scammer. They're "fattening" the pig.
Its very very good to name these scams with strong language.
It reminds of people to not be the 'pig' to be butchered, to know that their greed or lust could be manipulated by an organization behind that screen, and that they are a pig walking into a slaughterhouse willingly.
Not to this scale, level of sophistication, global reach, ease of finding victims and the scammers being victims (of human trafficking) themselves. Using crypto, human trafficking to force people to contact victims nonstop, having scripts and actors, legitimate-looking websites showing fake profits is new and novel.
Now add AI into the mix, along with large-scale data breaches - would not be surprised if, by 2030, the majority of individuals over 60-70 years old are contacted by at least one very convincing scammer that the victim will have difficulty distinguishing from an actual family member. It's already happening - only a matter of time before it's more widespread.
I always thought the euphemism "pig butchering" referred specifically to the case where a government kills a company via persecution in order to gain the wealth contained within. sort of in the sense "you let your pigs(private industary) get fat and wealthy. and when times get tough, you can butcher(fines, taxes, regulation and persecution) one of them to eat well for a while." usually seen in the context of chineese companys
Something I don't understand is why don't any scammers ever go to prison? For example, people like Logan Paul have run multiple scams now and have had zero repercussions (except making loads of money off of naive people). Is scamming legal?
You just have to keep passing the blame, Logan Paul claims he didn't intend to scam people and was himself scammed by the developers he hired and that is why his project never materialized.
The difference between running a scam and running a failing business is just a matter of intent, which is hard to prove.
> ... becomes fraud when you start lying, even if your intentions are "good".
You have to prove they lied. I.e. that they knew they were defrauding customers, which goes to intent. Though I suppose it could be lying only later, in the cover up -- if Logan was stupid/lazy enough to trust dishonest people to build his game then deny or renege on refunds.
Regardless I imagine we'll find out soon as he sues CoffeeZilla since he may be countersued or be otherwise unmasked in discovery. CZ already has videos of Logan saying CZ is a stand up guy who does good reporting.
This article makes it sound like they would go after them if they knew who they were? I don't know what scams Logan Paul has done, but I'd imagine if they can get him on something that they will?
People like this ex CEO go to prison all the time. Stateside scammers misrepresenting why they’re getting their victim to wire things go to prison all the time.
In this case its not proven that anyone knows who the scammers are, or where they are. Its just as likely that they are pig butchering the bank account owners in those other countries too.
Now, Logan Paul? You have to also realize when some communities use the word scam far too liberally. Naive people losing money trying to flip something thats not an investment, and failing, doesn't make it a scam involving any legal sanction. Even if it was an investment, properly registered, that just protects the promoter even more.
> You have to also realize when some communities use the word scam far too liberally.
That's true! People are calling an overpriced garbage dlc a scam nowadays, and that's just not true. It's exactly what it says on the label, so it's definitely not a scam, unless the marketing was very disingenuous.
But what Logan Paul did is not an example of that. It was not an investment that didn't pan out. It was an orchestrated pump and dumb scheme that was centered around a product, which he never delivered on.
You'd have grounds to argue if the game was delivered - but as it stands you cannot call that anything but a scam
> “There were people who lost 70, 80% of their retirement” as a result of Hanes’ actions, Mitchell told CNBC on Wednesday in a phone interview.
Let this be yet another painful reminder to the rest of us that diversification of your retirement funds is critically important. Putting 70% of your life savings into one investment leaves you with the stark possibility of surviving off only 30% of what you spent a lifetime saving.
That you can be successful CEO of a bank for many years and still a complete idiot around financial investments or transactions... I'm not sure what it says about CEOs of banks.
> “He said, ‘Brian, I’ve got this money and it’s in cryptocurrency, and I need $12 million to help verify the funds.’
This was the line that got me also. Did he not realize how stupid the words coming out of his mouth sounded?
I've heard that scam victims often double down and put on blinders, because the alternative would mean they were being scammed and they don't want to accept that. But man, those are a huge pair of blinders.
And even at the end, he thought that he could have got it back if he hadn't been arrested at that time.
It scares me a bit: I think I'm smart enough, and not greedy, to fall for this kind of scam. But I suppose many people that fall for scams also think they're smart (I wonder if they think about whether they are greedy?). Often they are hit at a time in their life when they are vulnerable. So can I really be sure of myself?
Likewise, I think of my elderly parents - I tell them how to look out for these scams, and all the warning signs, and they understand, but maybe there's a moment where the scam might work on them long enough.
I think the common case in a lot of these scams is that people operate by themselves at the beginning (that's a vulnerability the scammers exploit). So a good defence is to have a trusted family member to share all money matters with.
That's true, it's always easier to be caught up in a scam than you think it would be.
I haven't been scammed, but I've been tricked by the cops into saying something in a certain situatoin I shoudln't have, even though i was a long-time ACLU member who thought I was an expert in your rights and best practices not to talk to cops! they're just really good at tricking people, they've been trained in it. As of course have scammers.
Still... this one seems especially wild. What banker could think any legitimate financial instrument required you send to millions more to "activate"? Although I guess once you're in for $10 millionn, your incentive to avoid admitting you've been scammed is even higher? And I guess maybe "cryptocurrency" is something nobody actually understands but just seemed like magic money -- but what is a BANKER doing investing millions in a financial product he doesn't understand at all? It's pretty embaressing.
And of course that's without even talking about the greed and complete abuse of money that wasn't his in a small town where literally knows the people he's stealing from of course. But just the sheer stupidity about financies from a banker. Like I wouldn't be shocked other people would fall for this, but a banker believes that this can possibly be a legitimate financial instrument and not a scam?? Maybe those scammers were really really good.
It's one thing to get involved in a scam and another to steal people's money for your own ends. This guy stole from his family, church, and community. He's scum.
My money is on overconfidence. He's a bank CEO, so "of course" he knows all the risks around the latest financial wizardry (in this case crypto). The possibility that he doesn't know what he's doing simply wouldn't occur to him.
Could you please stop posting unsubstantive comments and flamebait? You've unfortunately been doing it repeatedly. It's not what this site is for, and destroys what it is for.
I'm not talking just about one comment—it's a pattern showing up in a whole bunch of your comments. We have to ban accounts that do that and I don't want to ban you, sof you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.
One thing I didn't get is if he wired the money to a bank account (and not a random cryptocurrency address), how could they not found the scammers who did this.
Basically, the real scammers have a series of people who have bank accounts, but don't know the true identity of the scammer, and those people receive the wire and transfer the money in some other form.
Often, the "Money mules" don't even know they're part of a crime, and are told they're receiving legitimate money to their personal accounts, withdrawing it, and transporting it somewhere.
Sure, you can track down and try to arrest the money mules, but it doesn't feel great to arrest someone who was only an unknowing participant.
Because law enforcement in the US is corrupt and incompetent. They prosecute those who undermine them, instead of scammers who undermine American citizens. It's crazy the number of cases I see towards those who convert Bitcoin for US dollars due to circumventing MSB laws that allegedly enables money launderers but have no proof, while there are those who are provably stealing money who never get caught or even investigated.
Just try and find a case of fraud that was reported and successfully resolved by the FTC for an average American. I know people who have collectively lost over $1m who have never, and probably will never, see any resolution to their case. Some scams even have public founders and work using traditional financial rails.
Normally if mucking around with crypto you wire the money to a broker such as Coinbase or Kraken who then change it to crypto and then it goes off to random cryptocurrency addresses. The article doesn't say which institution it went to but they were probably not the scammers themselves.
I don't get that impression and the article doesnt say
There are bank accounts in random countries he goes to visit or thinks he needs to visit, and an article saying money from the bank is wired directly into a crypto wallet, which is impossible. I’ve used institutional OTC desks that convert your incoming wire into a crypto asset and address of your choice at a pre negotiated exchange rate, but that is such a specific thing that you cant accidentally do
The article makes it sound like it was wired directly to a crypto wallet in Hong Kong
Bank or not, good luck tracing anything through China. Odds are good this could have even been a nation state level scam run by North Korea. They get a lot of funding this way.
I’m sure it’s a complicated situation, and with this exploit alone being on the order of tens of millions of dollars, the attackers would have secured their transaction flow from the West
He wasn't. If he lost only his own money, he'd be a victim. He stole tens of millions of dollars from other people, ruining them, and sent it to scammers. (Because he thought he could keep the profits from the scammers.)
It’s interesting that this one guy gets 24 years over 47 million dollars. Yet, not a single executive, board member, VP or SVP got arrested for the fraud that lead to the 2008 crash. We are talking orders of magnitude more than this and they declined to prosecute even though the evidence was absolutely abundant as we now know.
This guy doesn’t deserve any sympathy but it should be known that he’s hardly the most egregious financial criminal walking the streets. That honor goes to Jamie Dimon of JP Morgan Chase.
edit: at the very least, they should have fired all the executives from the banks, and their boards, and stripped them of their compensation packages, and clawed back anything they earned in that time period, and banning them for life from working in the financial sector in any capacity ever again. That would have been more appropriate than jail time and sent an actual message to Wall Street that this behavior won't be tolerated.