Bob & the Butchered Pig Ponzi:

by Winn Schwartau
5 mins read

An old high school buddy called and asked me to loan him $2.4M to unlock his $90M crypto wallet.

A harsh lesson in Reality Distortion, as proposed in The Metawar Thesis.

WTF?

Bob was one of the teens I had hung out with years ago. In the intervening decades, his name came up from time to time with others with whom I had stayed in touch. All good. During my first COVID-era foray to NYC in May 2021, Bob and I met up (after ~50 years) at an outdoor restaurant and had a great evening of memories and fine wine. He has had a prosperous professional career, owned a second home, and loves sailing and traveling. He retired and worked part-time because his passion was taking care of people. Life was good for Bob and those around him.

A couple of years later after his wife suddenly died he contacted me about traveling together. I sympathized but also reinforced how much I value my alone time on the road. Then, in early February 2024, I received a surprise call from Bob asking me for a $2.4M 3-day loan for which I would receive 25% profit. 

My brain screamed Crypto Scam. “Bob, please don’t tell me…” 

Through a ‘trusted’ acquaintance, he had been introduced to a ‘crypto broker.’ I guess the pitch worked. Bob had invested “a few hundred thousand.” He monitored his account and (too) quickly saw it was worth 6X, a little over a million bucks. Incredible return, right? My brain can recognize Ponzi at any distance, but Bob had never thought to ask me for advice; for the record, I have been in cybersecurity since 1983 and am well-published, as he should have known since he contacted me over social media. Oy.

What did Bob do? He invested more. Apparently, his ‘account’ was now worth $90M. He tells me that at that point, he decided to cash out. But ‘something’ had ‘glitched’, and the ‘processor’ needed additional financial input as some of the crypto had been part of an unexpected margin call on his wallet because of [blah blah blah]. I glazed over at the meaninglessness of all those words. WTF, Bob? 

Apparently, the $2.4M he had requested was needed to fund the ‘margin bond’ assurance for the guarantor and it absolutely would be returned in a few days, right after the account was unlocked because of “…more damn government oversight because of how much money you earned. They want to be sure it’s not a scam.” With the $2.4M, that would put him at a total of ~$5M invested. 

“Bob, this is a scam…” I ranted about an area I happen to be professionally involved with. I invoked the names Ponzi and Madoff, but to no avail. Talk about all of my cybersecurity ‘skills’ and feeling helpless.

“Winn, I’ve seen the paperwork. I’ve signed contracts. It’s my account. These are legitimate companies.” It occurs rarely, but I was at a loss for words. “Bob, no, no. It’s a classic scam…” and I tried to explain again. Regardless of my protestations, he decided to get the $2.4M from his family. I attempted to dissuade him, but that effort failed.

A few days later, he texted me, “I managed to find a lender, so all will be fine in a few days.” The loan was waaaaay below market rates. I don’t know the details and don’t want to. His texts continued. “Just waiting for final confirmation of funds.” “Should be done tonight.”  “Still waiting on transfer. Long story for another time.” “Trying to arrange it today.” 

Yeah, sure. I was feeling awful… he hadn’t listened, or perhaps I was not aggressive enough? Maybe I should have turned into a real a**hole to help him? I’m still conflicted and aphorisms come streaming by in an attempt to mollify my emotions.

A few days later, the coup de grace Bob full force. The text began, “Another delay. It appears I now have to come up with three bitcoins or approx $170K to complete this.” This was the final step of a highly effective scam known as Pig Butchering: First, fatten up the victim, then strip him/her to their bones.

Bob asked me for the $170K, and thankfully, my wife of 45 years said to me, “As his friend, I give you permission to be a complete jerk. Total a**hole. See if you can help him.” I called Bob, and it was even worse than I had thought. He was preparing to mortgage his house and was selling his antiques and furniture.” 

I became That Guy. “Bob, are you out of your f****** mind? This is a scam, like I told you about weeks ago? WTF, dude? You are a victim… this is my industry… I know this s*** and, Bob, you’ve been had…” That cathartic release felt good yet solved little. “But, Winn, I’ve been in my account. I have the app. It’s real. But, there’s a new regulation…” Bullshit. He then told about a new, unexpected 1% transfer fee… and another .5% fee for some other crap that meant nothing. 

At this point, I had to know, “Bob, how much of your personal money created this $90M crypto fund?” I wanted to know how much out-of-pocket cash he had ‘invested’ (read: lost). $6M was the too-quick answer. I don’t know whether that $2.4M loan was part of that number. I guess if you’re selling your furniture, it doesn’t really matter anymore.

“Bob, promise me – do not sell your house. STOP SELLING anything. ANYTHING. STOP IT NOW and CALL ME NOW!”

I immediately called a dear friend (also from NY. Well, he’s actually from Brooklyn), a retired FBI Cybercrime Regional Director. “Scott, tell me what you think…” No more than ten words came out of my mouth and he interrupted me with, “The poor bastard has been Butchered.”

After connecting Bob and Scott, I am told the lawyers have gotten involved. But whose side are the lawyers on? Retrieving money lost to criminals has not had a history of great success. I wish Bob all the best, but sadly, I have little hope for any recovery.

Takeaways: 

  1. Scams and their promises are always too good to be true. They trigger an emotional resonance based upon perceived love, wealth, or other ‘need’. Scams come from everywhere, and everyone is vulnerable. I spent some 20 years training millions of people on security hygiene and scams, but I guess Bob never got the message. 
  2. Should I have been more proactive as a friend by turning into a d*** and handing him the brutal truth earlier than I did? Maybe, but damn. When is the right time to intervene? If I ever face a similar moral dilemma, I will choose to be the Well-intentioned A**hole earlier. I’ve learned a lot. Besides, his bank account was tied to the app, and he was far away.
  3. Scams can destroy people. Their mental well-being can suffer from embarrassment, fear of ridicule, as well as the devastating loss of most of one’s money. We must recognize that financial distress is one powerful potential risk factor for self-harm and worse.

This is a real 2024 story. I am a cybersecurity professional and Bob knew it. It’s hard to reconcile how he didn’t see the scam, but people are people. If it can happen to my friend, it can happen to someone you know or love. 

As Scott said to Bob on our shared text channel, “Every victim I ever dealt with was met by a young Asian woman on LinkedIn who works with an older male partner described as an uncle who is a whiz at crypto.”

Please share the brutality of Pig Butchering with those you care about.

Pig Butchering is alive and well since 2021, with billions of dollars already lost. 

Be mindful out there.

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