When Sue Adams of Gloucester got home from vacation last summer, she responded to an email from a “Martha Harvey” with a PayPal order confirmation and $1,189 in charges on her account, according to Adams and a police report.
Adams wound up being caught in a complicated web over the course of three hours in which a scammer on the phone was able to get Adams to download an app onto her computer under the guise of a payment refund form, gain access to her banking information, move money around in her accounts, and convince her she had been over-refunded money.
She was then told to send $10,000 in cryptocurrency using a Bitcoin ATM at a local convenience store. Because the cryptocurrency in the transaction was sent to an overseas account, law enforcement has been unsuccessful in recovering it.
It turns out that Adams, who said she felt violated by what happened, is not alone in being drawn into such a scam.
The Essex County District Attorney’s office estimates at least $3 million was reported lost in Essex County to similar scams involving Bitcoin ATMs in the first six months of 2024, though those losses could be much higher, officials said. Adams wanted to tell her story so others don’t fall prey to such schemes.
Details of the crypto scam
It was Aug. 7 around 1 p.m. when Adams responded to the email, even though she does not know anyone named Martha Harvey, or use PayPal, except in an isolated, one-time transaction.
She eventually wound up speaking with “Edward.” He told Adams he could see three charges on her account totaling $1,189.20 and that he would be reimbursing her $1,100. He sent her an online refund form to fill out.
Adams told police her “finger accidentally added an extra zero,” typing $11,000 instead of $1,100, but Gloucester Police Detective Thomas Quinn says this was all part of the trick.
By downloading the app, the scammers were able to access her banking information and transfer money from her home equity account into her checking account. They used these transfers to trick her into believing she had mistakenly requested an $11,000 refund instead of an $1,100 one.
Adams said $11,000 showed up in her account without her giving Edward her banking information.
By then it was 3:40 p.m. and Edward told Adams to go to the bank. With Edward still on the phone, she drove to Citizens Bank on Main Street. Edward instructed her to withdraw $10,800 in cash three minutes before the bank closed.
Adams described herself as someone who is educated, smart and savvy, but the ask for cash raised a red flag.
“They knew what they were doing and I was sucked in,” she said.
No one at the bank asked her why she needed so much cash. The bank asked for an ID and if $20 bills were OK, Adams said.
On the drive home, Edward instructed Adams instead go to a convenience store on Rogers Street. Adams had never seen a Bitcoin ATM, so Edward sent her a photo of one.
She was instructed to use the machine to deposit $10,000. Adams selected the $10,000-$25,000 range for the deposit and Edward sent her a QR code for his crypto wallet.
“While stuffing a ton of bills into this machine I am reading the FRAUD WARNING sign,” Adams told police. “I recognize what I am doing isn’t right, but I also thought the money wasn’t mine. After all I hit the ‘extra’ zero by mistake giving me an extra $11,000!” she told police.
“They are so good at getting psychologically to you,” she told the Times.
After making the deposit, she realized she had only deposited $9,980. Edward told Adams to keep the remaining cash for her troubles.
The next day, Edward called back and told Adams the ATM failed to recognize the $9,980 deposit since she had indicated it would be at least $10,000.
Checking her account, Edward sounded incredulous because he told Adams she had received $6,600 back in two deposits of $5,800 and $800. Edward wanted her to withdraw the money, but Adams told him she had no time that day, despite Edward’s pleadings.
Instead, Adams called her bank’s fraud department and went to the bank, which immediately shut down her accounts and asked her to make a police report. A bank employee found the initial $11,000 had been transferred from her home equity line to her checking account.
“The money I stuffed into the Bitcoin ATM was mine after all,” Adams reported. And the $6,600 that showed up in her personal checking account the next day?
Scammers had moved it from her business account into her personal account.
“My money again,” she told police.
But, because Adams had deposited the cash into a Bitcoin ATM and the cryptocurrency had been transferred to an electronic wallet overseas, law enforcement could not recover it, despite efforts to do so.
Getting a handle on crypto ATM scams
The case caught the attention of the Essex DA’s office, including investigator and retired Marblehead Police Chief James Carney, and Assistant District Attorney David O’Sullivan, the deputy chief of appeals.
They said Adams is not alone in getting caught up in these scams, with seniors being especially vulnerable.
While it’s hard to put a figure on actual losses, Carney said from Jan. 1 to July 1, 2024, a ZIP Code search on the FBI’s Internet Crime Complaint Center with the terms “Bitcoin,” “Crypto,” and “ATM” in Essex County turned up $3 million in reported losses. The losses should be much higher given the assumption that only one in four victims come forward to report being victimized, Carney said.
Police departments such as Gloucester and Beverly have been out front in trying to get a handle on the issue, such as putting warning signs on crypto ATMs, he said.
Email crypto scams target a variety of platforms and it’s not just the elderly who fall prey, “but they are the most targeted,” Beverly Police Detective Shawn Desmond said.
By obtaining search warrants, the Beverly Police Department has seized over $150,000 due to scams involving cryptocurrency ATMs. The department is awaiting a district court judge to award the money back to individual victims, he said.
“We work with (New England State Police Information Network) who has a specialist trained in the tracing of cryptocurrency which has allowed us to freeze the transaction and get the money back through the” Bitcoin exchanges, Desmond said.
Many of these scams are operated by off-shore multi-national criminal organizations, Carney said.
The old standby, he said, has been to convince victims to wire large amounts of money to accounts controlled by scammers. However, money wires take time, and often require a bank official to set up. But the transfer of a victim’s cryptocurrency from their wallet to a scammer’s wallet is immediate.
Lack of oversight of Bitcoin ATMs
The problem is Bitcoin ATMs are unregulated in the Commonwealth, Carney said.
“As Jim said, these machines are subject to no state-level oversight or regulation whatsoever,” O’Sullivan said, noting the Essex DA’s office is seeing transactions of $10,000, $20,000 at a time.
The time may be right for consumer protection legislation, O’Sullivan said, such as a daily transactional limit of $1,000 per day per crypto wallet. A central registry of where the Bitcoin ATMs are located would make it easier for local law enforcement to take steps, such as warning convenience store owners to look out for unusual activity around their use.
O’Sullivan said the Essex DA’s office has been launching numerous investigations into cases such as Adams’ to try and head off the problem.
“While it’s not a hopeless situation, the odds against law enforcement are stacked,” O’Sullivan said.
The Essex DA’s office has partnered with NESPIN which provides resources to law enforcement. Through NESPIN, the office has been able to obtain warrants to trace transactions through the blockchain to an exchange.
“Because eventually, it will come through the blockchain and be useful to the scammers only if they can put it in an exchange and convert it to something else,” he said. Usually, these exchanges are offshore banks.
“What’s our recourse if they just thumb their nose at our warrant?” O’Sullivan asked. “Not much.”
In mid-August, Quinn contacted a Bitcoin Depot law enforcement compliance officer, who informed the detective the money Adams deposited in the Bitcoin ATM at the store had already been removed, making any attempt to seize it unsuccessful.
Quinn learned the DA’s office had traced the monies involved in Adams’ transaction to an overseas account.
“Unfortunately, the money went to accounts outside the United States and they have not been receptive to our law enforcement demands,” Quinn said.
Education key to heading off crypto scams
Law enforcement officials say education is key to heading off such scams, especially among older folks who tend to be more trusting.
The key is to never click on links in emails if you do not know who sent it.
“Once you do that, you are into their web. They just suck you in,” Quinn said. No legitimate organization is going to ask you to load money into a Bitcoin ATM.
The bank should have raised a red flag with her transaction for so much cash coming so close to closing, Adams said.
“While we do not comment on specific customer relationships, we’re committed to protecting our customers’ financial assets from evolving fraud threats,” Citizens Bank said in a prepared statement. “As always, we urge our customers to be very diligent against scams and not to send money to people that they do not know.”
Even though a teller may sense something is awry with a longtime customer, Carney said scammers work to gain the trust of victims, convincing them the employees of the bank are somehow corrupt or involved in illegal activity. The scammers coach victims to say they are buying a car or making home improvements and paying in cash to get a discount.
“We work with the banks a lot,” Quinn said, “but at the end of the day, they can’t stop you from taking your money out.”
Ethan Forman may be contacted at 978-675-2714, or at eforman@northofboston.com.