Overseas 'boiler rooms' target Manitobans in cryptocurrency scams: securities commission
Recent victim lost $30K after being tricked by fake U.S. driver’s licence, says senior investigator
A Winnipeg woman is out $18,000, after she fell victim to a cryptocurrency investment scam that ended up maxing out her credit card.
She phoned Jason Roy, a senior investigator at the Manitoba Securities Commission, to report the scam.
He said he gets calls like that all the time.
The Winnipeg victim told him she had been pitched an investment opportunity — essentially a "get-rich-quick" scheme. She didn't have the funds needed for her trading account, so she used cash advances on her credit card. They were then converted into cryptocurrency — and soon gone for good.
"We've got Manitobans that have lost … $250 — and some realize what's gone on at that point — and all the way up to 600,000 [dollars] in certain cases," Roy said. "We've had individuals who lose that amount."
Roy said while there are legitimate registered firms that sell cryptocurrency in Canada, potential investors need to do careful research. He recommends they speak to a financial professional who is registered with the securities commission.
The commission is trying to break the stigma that comes with being a victim and raise awareness of so-called "boiler rooms" overseas — call centres that are involved in phone scams.
They target Manitobans though "spoofing" — which involves scammers using software show a fake local phone number on their target's call display, Roy says.
"It's a really hard thing to admit to yourself that maybe you fell for something that you thought maybe you shouldn't have, or maybe you should have known better," he said.
Victims sometimes continue with the scheme because they are in shock or denial.
The boiler rooms are operating in Eastern Europe, the Middle East, Africa and Asia, Roy said, with dedicated staff who try to get victims to hand over money through their credit cards, e-transfers or cryptocurrency exchanges.
"These are sophisticated, professional operations that are running scripts that have been tested to make sure they work. It's not just some guy calling that you're immediately going to know it's a scam."
Police see more victims
He said it's hard to quantify how much money Manitobans are losing to the scammers. Nationally, the Canadian Anti-Fraud Centre — a federal organization that tracks fraud and identity theft — says Canadians had lost $144 million to fraud in the first eight months of this year alone.
Winnipeg police Sgt. Trevor Thompson said his financial crimes unit gets reports daily of people who have fallen prey to cryptocurrency trading scams.
He said unlike in years past, when scammers would get victims to send gift cards as payment, fraudsters are now asking for cryptocurrency. It can be very complicated for law enforcement to get that back, he said.
The scammers will typically give their targets detailed instructions on how to transfer the cryptocurrency, he said.
"[The scammers] keep them on the line, physically direct them, tell them where the [crypto] ATM is located, and give them instructions on how to make a purchase."
Then, "the purchase goes directly to their cryptocurrency wallet. Once it's in there, it's theirs. Simple as that."
Roy said one victim recently came forward to the commission after losing $30,000 in a get-rich-quick scheme that involved depositing money for crypto trading.
The victim sent cash after doing what she thought was due diligence on the man she was talking to — asking for the driver's licence of the man she believed was going to help her make money, Roy said.
"She was still on the fence as to whether or not this was real or not," he said.
"So we contacted the Georgia Department of Driver Services, spoke with senior employees there, [and] were able to confirm that the driver's licence that she'd been provided was a complete forgery."
The department actually did a facial recognition scan of the driver's licence photo, to see if the person was in their system at all, Roy said.
"And no, definitely not. So he was likely overseas and just telling her a tale."
The securities commission is encouraging Manitobans to report any potential scams to 1-855-FRAUDMB (372-8362).
If the activity is determined to be fraudulent, the commission may issue an alert for investors.