U.S. Department of Justice Indicts 12 Members of Social Engineering Fraud Ring, Led by 22-Year-Old Malone Lam

U.S. Department of Justice Charges 12 Suspects for Allegedly Stealing Up to $263 Million in Cryptocurrency

The U.S. Department of Justice has charged 12 suspects for allegedly stealing cryptocurrency valued at up to $263 million. According to the DOJ press release, the suspects utilized social engineering and a tightly organized division of labor to execute multiple cryptocurrency fraud schemes. These 12 suspects are connected to another cryptocurrency fraud suspect, Malone Lam. According to the indictment, 22-year-old Malone Lam is a key leader of the fraud ring, serving as its social engineer under aliases such as King Greavys, $$$, 7, Kg, and Anne Hathaway. Malone Lam hails from Singapore. This criminal organization is referred to in the indictment as The SE Enterprise (Social Engineering Enterprise), which consists of 42 pages. For those interested in the full details, the complete indictment can be accessed on the U.S. Department of Justice’s official website.

Official Announcement and Arrests in California

The U.S. Department of Justice announced in an official press release that twelve suspects were arrested in California, including both U.S. citizens and foreign nationals, with two unnamed individuals residing abroad. The charges faced by these suspects include extortion, telecom fraud, money laundering, and obstruction of justice. The DOJ has indicted all defendants under the RICO (Racketeer Influenced and Corrupt Organizations Act) statute, which originated in 1970 to combat organized crime associated with the mafia.

Fraud Ring’s Organized Division of Labor and Social Engineering Tactics

U.S. Attorney Jeanine Ferris Pirro, Special Agent Sean Ryan from the FBI’s Washington Field Office, and Special Agent Kareem A. Carter from the IRS Criminal Investigation Division jointly published the indictment on the official website. The charges faced by all defendants include violations of the RICO statute, telecom fraud, money laundering, and obstruction of justice, with additional charges against Malone Lam added on September 19, 2024.

Criminal Activities of The SE Enterprise

According to the indictment, The SE Enterprise began its criminal planning in October 2023, with activities continuing until March 2025. The fraud activities developed after several individuals targeted victims on online gaming platforms, establishing online friendships. The members of the fraud ring included the organization’s leader, hackers, target identifiers, telecom fraudsters, money laundering couriers, and thieves who stole hardware cold wallets. Notably, based on public records, most members of this group are quite young, with the youngest being only 18 years old.

Fraud Scheme Execution

The fraud ring operated with a division of labor where hackers infiltrated websites and servers to obtain personal data related to cryptocurrency or directly purchased others’ personal information on the dark web. Organization members and target identifiers compiled information to ensure they found the wealthiest victims. The telecom fraudsters contacted victims, using social engineering tactics to convince them that their accounts had been compromised, and then posed as customer service representatives to ‘help’ protect the victims’ accounts. Ultimately, the money launderers stripped the stolen cryptocurrency and converted it into dollars to purchase luxury cars and goods.

Purchases of Luxury Goods

According to the indictment, the members of this social engineering organization purchased various luxury goods and services, including nightclub services costing up to $500,000 per night and 30 luxury cars such as Porsches, Lamborghinis, Ferraris, and designer bags.

Money Laundering Techniques

The fraud ring employed multiple methods for laundering money, including using Peel Chain to transfer cryptocurrency through a series of virtual wallets, making small transactions to make tracking difficult. They also utilized A Pass-Through Digital Wallets and private virtual networks with mixers to ‘clean’ the stolen cryptocurrency.

Specific Fraud Incidents

The indictment states that on August 18, 2024, suspect Malone Lam contacted a victim residing in Washington, D.C., fraudulently obtaining over 4,100 bitcoins, valued at over $230 million at that time. In another case from July 2024, Malone Lam and others were accused of stealing over $14 million worth of cryptocurrency from another victim.

Additional Charges and Activities

The indictment also accuses members of the fraud ring of burglary. It states that member Marlon Ferro traveled to New Mexico in July 2024, breaking into a victim’s home to steal their hardware virtual wallet, while Malone Lam monitored the victim’s location through their iCloud account.

Extensive Money Laundering Activities

The fraud ring engaged in extensive money laundering activities, with Kunal Mehta, Hamza Doost, Joel Cortez, and Evan Tangeman reportedly providing unauthorized cryptocurrency cash-out services for the group. They used fake identification to secure luxury rental residences, booked private jet travels with stolen cryptocurrency, registered luxury cars under shell companies to conceal ownership, and reserved private jet trips for members through U.S. mail, purchasing luxury Hermes Birkin bags among other items.

User Warnings from Exchanges

Coinbase and other exchanges have warned users that they will never proactively contact users to request sensitive information such as recovery phrases and passwords. However, there have been recent incidents where Coinbase employees were bribed to leak user data to the fraud ring, reminding us of an old adage: putting money in an exchange means “Not Your Crypto, Not Your Key.”

Protecting Digital Assets

For guidance on how to protect your digital assets from social engineering fraud rings and how to mitigate risks in the event of a data breach, please refer to my other article.

Risk Warning

Investing in cryptocurrency carries high risks, as prices can be extremely volatile, and you may lose your entire principal. Please assess risks carefully.