How Hacks Happen
Hacks, scams, cyber crimes, and other shenanigans explored and explained. Presented by cyber security teacher and digital forensics specialist Michele Bousquet.
How Hacks Happen
Catfishing 3: The Money Mule
Romance scams aren't the only goals of a catfish. The catfish needs some way to get all that money delivered into their hands without leaving a trail. To accomplish this, they recruit unwitting victims into laundering their money. Meet Alice, who unknowingly becomes a money mule for Parker the Catfish.
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Catfishing 3: The Money Mule
Welcome back to How Hacks Happen. I’m Michele Bousquet, a cybersecurity researcher and author who really doesn’t like catfishing, because it can ruin people’s lives. This is the last in our three-part series, where I’ll tell you about an even darker side of catfishing, one that can draw innocent people into a life of crime.
If you haven’t listened to parts one and two of our catfishing series yet, you might want to do that first. In any case, here’s a quick recap.
A catfish named Parker, who is a teenager from Nigeria, has been pretending to be Warden Kennedy, a charming, handsome middle-aged American who’s in line to receive a large fortune. Parker love-bombs Mary, a retired schoolteacher in Pennsylvania, and he uses all manner of technology to fool Mary into thinking Warden is for reals. Mary eventually falls in love with Warden, even though they’ve never met in person. When Warden appears t o be stuck in Istanbul and needs money to get back to the United States, Mary sends thousands of dollars to him before she realizes the money was actually going to a catfish.
That story, and the one you are about to hear, are based on the real stories of catfish victims. Everything that happens in these stories has actually happened to someone in a catfish scam.
While Mary’s romance scam is tragic on its own, things could have gone much worse. In this episode, I’ll tell you about a catfish scam that doesn’t involve sending money, it’s about receiving money. And it can land the victim in jail.
The easiest way to explain this is to go back to the story of Parker, aka Warden. In the first two parts of this series, we focused on Parker catfishing Mary, a lonely widow from Pittsburgh. But little did we know that at the same time, Parker was also catfishing several other women, including…Alice. But with an entirely different script.
Alice’s story starts off a lot like Mary’s. Alice meets Warden when he sends her a message on Facebook telling her she has a beautiful smile. Alice is divorced, in her late 50s, working as a hospice nurse, and lives in the suburbs of Denver, Colorado. Her children are grown and gone, although her daughters check in with her often. Still , she’s pretty lonely, and getting attention from a good-looking member of the Kennedy family lifts her spirits.
Warden tries his standard script of love-bombing Alice, but his efforts fall flat. Alice just isn’t into it. Plus, she makes it clear that she’s never going to send any money to Warden. Still, Alice keeps responding to him, because the chatting is fun and makes her feel less lonely. And in no time at all, they’re messaging several times a day. Warden can be pretty funny, and he seems to appreciate Alice’s sense of humor, too. Alice eventually admits to Warden that chatting with him has become the high point of her day, and she even calls him her best friend.
So Parker, I mean Warden, shifts gears, and tries something else. He asks, “How would you like to make some extra cash?”
Well, duh. That’s a silly question. Who wouldn’t? Especially Alice. In case you didn’t know, hospice workers do okay but they don’t make a huge amount of money, and Alice is struggling a little, especially since the insurance on her house went up last year. And with retirement looming in a few years, Alice has been looking at doing a side hustle of some kind. This is one of the little factoids that she shared with Warren during their many chats together.
So Warden makes a proposal.
If Alice could take on this part-time job, just three hours a week, it would help Warden soooo much. He’s got this financial dilemma, and he’s so happy he met Alice because she can help him solve this problem so easily, and she can make a few bucks in the process. Win-win.
During their many conversations, Warden had shared with Alice his dreams of running for office, so he could take his rightful place as a member of the Kennedy family, in the United States Senate. And Alice had said she’d like to find a way to increase her income to cover her ever-increasing bills. This is a way to make both their dreams come true. They can help each other, as best friends do.
See what Parker did there? For the backstory for Warden, Park is using the same story for Alice, as he did for Mary. Using the same backstory makes it easier for Parker to keep track of his scams.
Warden says this little side hustle just has to be kept on the down low. Like, Alice can’t tell anyone about it, not even her daughters. Because Warden’s political rivals might get wind of it, and he just can’t take that risk.
Alice is a little hesitant at first, but after some thought, it sounds kind of exciting. She doesn’t get much excitement in her life. And now, her handsome, soon-to-be-famous best friend is offering her some of the old razzle-dazzle, the old whatever you want to call it. Whatever it is, Alice wants a little of that.
And with the hook set, the catfish is ready to reel her in. And this is where the real scam begins. Alice is about to become a money mule.
A money mule? What the heck is that?
A mule is an animal that comes from the breeding of a donkey and a horse. Donkeys and horses aren’t the same species, but they can mate to produce mules.
When our ancestors were trying to decide what four-legged creature to use to carry stuff around, donkeys and horses were at the top of the list. But donkeys can be really stubborn, and horses only live around 25 to 30 years. But mules, the product of their union, are that lovely combination of the less stubborn horse and the longer-living donkey. For this reason, mules have been, for centuries, the beast of choice for transporting goods over rough terrain, or long distances. But keep in mind, this is never the mule’s choice. The mule has a master that makes this choice.
While actual mules are still around and are used in the same way, the term “mule” is also used to describe a person who transports drugs or other other illegal goods. The mule isn’t the boss or the instigator, it’s just the one carrying the stuff. If you’ve seen the movie Goodfellas, you saw this in action. In one of the scenes, the main character’s babysitter, Lois, gets busted for trying to smuggle cocaine onto a plane. Lois was a mule. She got 10 years in prison, while her boss got witness protection.
Yup, that’s how it goes for the mule. All the risk, and none of the glory.
Mules aren’t just used for drugs. They can also be used for other types of illegal goods, like money obtained from scams. And a lot of them don’t even know they’re doing it.
Let’s get back to Warden, and see what he has in mind for this amazing plan that will help both himself and Alice.
At the center of Warden’s backstory is that he wants to get into politics. He’s been working behind the scenes, he says, to garner support for his election. He can’t wait for his mommy’s $83M inheritance to come through. No, no, no. He wants to get things going now, right away.
He tells Alice that happily, there are a number of Senate and House members willing to back him up. The thing is, they have to do it quietly, so they want to give Warden campaign donations on the sly, which poses a problem. Warden can’t have this money coming directly to him, so he needs an intermediary. And Alice is the perfect person to do this.
All Alice has to do is accept some transfers to her bank account, which she will then pass on to Warden. And for her trouble, Alice gets to keep 5%. Easy peasy.
To get things rolling, Warden asks Alice for her bank account number, but Alice isn’t comfortable with this. You don’t give out your bank account number. I mean, she trusts Warden, but what about all his politician friends? They might do something with her money, and there’s kind of a lot in there. Like over $50K that she’s saved up for retirement.
So Warden suggests something else. Alice is going to set up a new bank account, one completely separate from her main account, and that’s the one they’ll use for the transfers. That seems legit to Alice.
Then Warden walks Alice through setting up an account on one of the main cryptocurrency exchanges. So, a quick primer here–when you buy cryptocurrency, you pay for it with an established currency, like US dollars in this case. And in exchange, you get a certain amount of “coins” in that cryptocurrency. Like at the time of this episode, one Bitcoin is worth around $90K US dollars. You can get fractional coins too, so for, say, $1K, you can buy a tiny piece of a Bitcoin. And these purchases go through a financial mechanism called an “exchange”. But in order to purchase coins on these exchanges, you have to sign up for an account and give them some identifying information, like your name and phone number.
When you buy cryptocurrency, it gets put in a digital wallet. This is why you’ll sometimes hear people talking about their Bitcoin wallet. It’s not a physical wallet, it’s all digital. I know, if you’ve never dealt with cryptocurrency, this can seem really unsafe and weird, but millions of people all over the world do this every day, and generally, it works just fine.
So she sets up the account, entering all her personal information, and she links her new bank account to the crypto exchange, too. So far, everything’s legit.
A few days later, big amounts start showing up in Alice’s new bank account. $10K here, $50K there. And every few days, Alice subtracts out her 5%, and puts the rest in her Bitcoin wallet.
At the end of the month, Warden walks Alice through transferring the Bitcoin in her account to his own Bitcoin wallet. Warden is very happy and excited, he can just taste his political future! And Alice is really impressed with herself. She’s learning some new things about technology. Hey, maybe she’ll even invest in a little crypto herself!
This goes on for a few months, with Warden getting these wonderful contributions, and Alice making a nice little sum of money on the side.
Then Warden changes things up. One day a package gets delivered to Alice’s house, and it contains a big teddy bear. At first Alice thinks it’s just a gift, but strangely, there’s no card or receipt in the box. Then Warden pipes up and says hey, did you get the bear?
Warden tells Alice to empty out the bear’s stuffing, and to her shock and surprise, there’s cash stuffed up in the bear. Like, $10,000 in 20s and 50s and 100s, piles and piles of them. Warden tells Alice that one of his supporters is super sensitive about his privacy, so he chose to mail the package of cash to Alice instead of doing a wire transfer to her bank account. The post office sometimes scans packages to see their contents, which is why the money’s in a stuffed bear.
Alice is going to buy gift cards with the money, and send Warden the codes off the backs of the cards. And Alice can keep 10% of the money this time, a thousand dollars.
A thousand dollars, just for her? This is awesome. Alice is already planning what she’s going to spend that money on. But first she has to get the gift cards.
Buying the gift cards turns out to be kind of a pain, since no one store will sell her $9000 worth of gift cards. So she goes to several stores and buys one at each place. Then she scratches off the back of each card, and sends the codes to Warden.
And with her $1000, Alice goes out and buys some new clothes, which she hasn’t done in a long time. She snaps a picture of herself in one of her cute new outfits and sends it to Warden, and he gushes over it. He is so glad he could help her look so nice.
Alice, in her excitement, texts some pictures to her daughter Darla, too. Darla is a lawyer who lives in the city, and she doesn’t get out to visit her mom very often. But instead of being excited for her, Darla starts grilling her mom about this new side hustle. In hearing more about it, Darla, who’s hip to how catfishing works, immediately calls bullshit. Darla even searches for some of Warden’s images and she finds them in Sam Spikes’ Instagram. But Alice is not convinced. She insists that Sam has to be the catfish, not Warden. Warden trusts her so much, he even sent her a picture of his driver’s license. Her bestie has to be for reals. Look, she has new clothes, and maybe pretty soon she’ll be able to get a new car! Warden is the best.
Darla is frustrated at this, but there’s not much she can do. It’s her mom’s money, after all, so she drops it for the moment.
Alice, in turn, tells Warden about this conversation with Darla, and he sympathizes. Is it possible Darla is jealous of Warden? Alice opens up about her relationship with her daughter. Darla always had to have the last word, always proving how much smarter she is than everyone else. They agree that Alice just won’t talk to Darla anymore about her relationship with Warden.
Alice is really loving this new life, not having to worry about money. She uses her awesome new state-of-the-art laptop to message Warden, and thank him for this wonderful opportunity.
The next assignment is a little more exciting. Warden tells Alice to drive to an address in Silver Springs, Colorado, about an hour away from where she lives. There, she’ll pick up a box of cash from a woman named Sheila, which Alice will then use to buy more electronics to send to Warden’s other lawyer in Tennessee. Alice shouldn’t say anything about Warden to Sheila. The political campaign is still a secret, and if Sheila asks any questions, Alice should just say she’s a courier.
This one is really exciting. It’s like Alice gets to be James Bond for a day. She puts on one of her new outfits, and hops in the car.
In Silver Springs, Alice pulls up to a hotel, as instructed. When Alice gets to the door, she hears an argument going on inside. No matter, she has a job to do! Alice knocks on the door, and is greeted by Sheila, an older woman, and a very tall younger man named Thomas, who is holding a cardboard box. Sheila looks like she’s been crying, and Thomas is pretty red in the face. He looks pretty mad.
Thomas peppers Alice with questions. Where is this money going? Who is this guy, who’s been threatening his mother? Alice repeats, over and over, that she’s just a courier. Thomas ends up shoving the box into her arms and slamming the door in Alice’s face.
Well, that was weird. Alice doesn’t know much about how political contributions work, but it doesn’t feel like that’s the way they normally go. Oh well, she’s got the box, then she goes to three different stores on the way home, spreading out the purchases to avoid suspicion, just as Warden told her to.
After Alice gets home, she looks out her window and is surprised to see Thomas, the guy who just slammed the door in her face, sitting in a car, right in front of her house. She quickly pulls the curtains closed, but the encounter unnerves her a little. Slightly panicked, she messages Warden. He tells her not to worry, Thomas is probably just mad that his mom wanted to support Warden. After all, he is a disgraced Kennedy.
But then, the very same day, she got a letter from her bank saying they were freezing her account for suspicious activity. And now, Alice can’t shake the feeling that something is off about this little side hustle of hers.
A few days later, a new message from Warden pops up. He praises Alice for such a job well done, and asks her to do another pickup, this one in Cheyenne, Wyoming, a couple of hours away.
But Alice, with this bad feeling about the Thomas guy and the letter from the bank, she just isn’t in the mood. She says to Warden, Nah, I need a break. Maybe next week. Really, she’s just stalling for time until she sorts out the thoughts swirling around in her head.
So Warden tries a different tactic. He trusts Alice so much, he says, that he wants her to do an even bigger assignment, this one in Kansas City. It’s an eight-hour drive for Alice, but the payout for her would be $20,000.
Oof! That’s a lot of money. Alice would finally be able to get a new car to replace her old rattletrap. But she’s still not sure. She’d have to take time off work, and this bank thing...
Warden presses her some more. He really wants her to do this. She can just deposit the money in a Bitcoin ATM. She doesn’t have to drive around and get electronics or gift cards. It’ll be really easy. Could she please just do it?
When Alice says No again, Warden plays his trump card.
“If you don’t do this for me,” he says, “I’ll tell the police that you’ve been laundering money.”
This stops Alice in her tracks. Has she been laundering money? Has she been involved in taking illegal money and making it look legal? Like… cash in a box that you turn into gift cards or electronics? Or bank deposits from who-knows-where that you send off to some Bitcoin wallet?
Alice gets a sinking feeling in the pit of her stomach. She thinks about everything she’s done, and realizes that’s exactly what she’s been doing. She’s been laundering money for Warden. And she knows enough about the law to know that she could go to jail for this.
Her daughters will be so ashamed. Alice will probably lose her job, and maybe even her house.
Alice pushes down the panic welling up inside of her, takes a deep breath, and responds to Warden. She says, “Let me think about it.” And she shuts off her computer.
Alice has to think. Just think, don’t freak out. She hasn’t willingly done anything illegal. She was just stupid. Stupid, stupid, stupid. No, don’t go there, that’s not constructive. Just deep breaths.
Alice realizes she kept the original box that the teddy bear came in, the one with $10K stuffed up in it. The return address for the package is from someone named Mary, in Pennsylvania. Sound familiar? Yep, the same Mary from parts one and two of this series, that was trying to get Warden out of Turkey so the two of them could be together. But Alice doesn’t know this. She just thought Mary was a politician’s secretary or something.
Deep breaths. Alice calls the phone number on the box, not knowing what to expect. And miraculously, Mary picks up.
And the two of them talk. It’s a long conversation, over two hours long. By the end, both Alice and Mary are crying.
It turns out, Mary thought she was sending a box with $10K in it to Warden’s lawyer to get him out of a Turkish jail. And on Alice’s side, Warden had never once said anything to her about being in Turkey.
Alice finally realizes that this super exciting, super lucrative side hustle is a big scam, designed to make her into a… money mule. If the police come a-knockin’, the money mule will be the one to take the fall, not the scammer.
At this point, Alice has two choices. She can believe Warden’s threats and keep working for him, and hope the police never connect her to the scam. Or she can call the police herself, tell them what she did, and give them all the information she has. Maybe she can convince them she was a victim too, just like Mary and Sheila.
Time’s up! What’s it gonna be, Alice?
Voice on phone: Denver PD. How may I direct your call?
Alice: I’d like to report a money laundering scam.
Good job, Alice. Good job.
In case it’s not clear how the money laundering worked here, let’s look at it more closely.
Money laundering takes cash that was gotten illegally, and makes it look like legal money so the person with the money can spend it without raising any red flags with the banks or the police. If you’ve watched the series Breaking Bad, you saw some money laundering in action starting in Season 4. Walter White, a meth dealer who regularly receives huge piles of cash for the drugs, can’t just go around spending big wads of cash, so instead he buys a car wash. To launder the meth cash, he inflates the car wash’s sales numbers every day. So if the car wash did $1000 worth of business one day, Walter enters in another $2000 worth of sales, marking them all as cash sales. Then Walter deposits the $2000 cash into the company bank account, and the receipts make it look like it’s just a really profitable day at the old car wash. Then Walter can withdraw that money, transfer it, spend it, whatever, and it all looks perfectly legal.
In the case of Parker / Warden, the money comes from a scam, and he can’t just have his online girlfriends wire the money directly into his own bank account. A bank account has a name and identity associated with it. So no, no, no. The money needs to take a different route, one that will be hard to trace.
He can’t have a whole bunch of money coming into one Bitcoin wallet. Instead, he shuffles the money around between different wallets to make it harder to trace.
As for the electronics Alice sent to Nevada, those went to another money mule, who converted them into Best Buy gift cards and sent the card numbers to Parker.
With gift cards, Warden was selling them on the black market for 80% of their value. The money from those sales presumably goes into another account of some kind, maybe CashApp or PayPal.
There are other tricks too, too many to describe. The point is, these scammers are adept at shuffling money around so it’s hard to trace where it came from, and where it’s going. Mysterious bank deposits, cash in a box, gift cards, Bitcoin transfers, deposits to a Bitcoin ATM… these are all red flags to watch out for when spotting a money laundering scam.
Let’s take a peek in back at Alice to see how she’s doing.
Alice: Here’s the two addresses he gave me, for a pickup.
Officer: Thank you. We’ll send someone over there right away.
Darla: Mom! I came as quick as I could. Is everything okay? I’m her lawyer.
Officer: Everything’s just fine. Your mom is cooperating fully, so there won’t be any charges.
Alice: I feel so stupid! I thought he was my friend.
Darla: Oh mom, don’t. Everything’s going to be okay.
This tender exchange brings me to another point. You can laugh at people who fall for money laundering scams and romance scams, call them stupid, and make them feel even worse than they already do. But I ask you, have you ever done anything stupid in your life? I know I have. Instead of calling these victims names, how about we educate people so it doesn’t happen anymore?
If you know someone who’s at risk for one of these scams, someone lonely, who’s a little naive about the internet, show them the YouTube channel Catfished. It’s a fascinating watch, and it will educate way more than lectures or Facebook or finger-wagging or I-told-you-sos.
You can also point them to this podcast, particularly the three episodes on Catfishing, including this one. I made these episodes especially for this purpose: to educate more people so we can all stay safer, and maybe, just maybe, one day, these kinds of scams will be a thing of the past.
I really hope this exposition of catfishing helps you understand the nature of these scams, and how you can steer clear of them, and help your family and friends do the same.
Shout-out to Katie Haze of Katie Haze Productions for producing this episode.