‘Puppet master’ scammer syphoned $1.2 million from pensioner’s bank account

Cyber criminals spent months befriending a trusting pensioner and then syphoned more than $1 million from her bank accounts – one of the biggest frauds of its kind in New Zealand this year.

The massive theft was discovered when the 70-year-old victim, who lives alone in Christchurch, went to buy Chinese takeaways and her bank card was declined. When she got home and checked her accounts, she discovered her life savings were gone.

The woman had been so convinced by the scam that when the bank suspended her accounts and alerted her to two suspicious transactions totalling nearly $40,000 she told them not to worry, as she was investing money in cryptocurrency.

Over the next four months, the fraudsters continued to drain her accounts, ultimately taking $1.2m – money she will likely never recover.

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“I was devastated,” the woman said. “I should have known better.”

The elaborate fraud comes amid a wave of cyber crime, which has seen record numbers of Kiwis losing increasingly large sums of money to scams.

The Christchurch woman said that earlier this year she received a call on her cellphone from a young, smooth-talking man. Speaking with a Canadian accent, he identified himself as David and said he worked for Spark, a company she was a customer with.

David said he was checking in to make sure everything was OK, before striking up a broader conversation.

In the months that followed, David called the woman most days, usually mid-morning. The pair talked about the weather, their pets and what she’d been doing. He said he was originally from Canada, but lived in Auckland and had a german shepherd.

“I just thought he was trying to be friendly,” she said.

As David’s calls continued, the woman received a call from another man purporting to be employed by Spark. This man said there were some issues with her laptop computer, and he needed remote access to the device to fix it, which she gave him via an app. She kept the computer open for about 10 days, so the man could work on it.

In the meantime, David began talking to the woman about investing in cryptocurrency, where he said there was a lot of money to be made.

In 2021, the woman sold the home she once shared with her late husband and downsized. The proceeds from the sale were sitting in her bank account while she decided what to do with them.

David said he could help the woman invest in crypto, and convinced her to give him remote access to her computer so he could set her up with an account with crypto exchange Easy Crypto. She also gave him access to her bank accounts so he could invest money on her behalf.

On July 25, Westpac noticed two transactions from her accounts to Easy Crypto, for $19,000 and $20,000, and put a hold on the funds.

A person from the bank’s anti-fraud team called the woman to make sure she wasn’t the victim of a scam, which they said were rife, especially via crypto.

“It’s definitely not a scam, I can assure you,” the woman said.

The caller asked the woman to provide proof of her crypto account from Easy Crypto, which she did via email the following day.

“I am investing my own funds in my cryptocurrency. For me investing in crypto helps to protect my wealth from inflation. I shall be grateful to you if you please do not suspend my account next time,” the email read. (It was actually written by David but with the woman’s knowledge.)

Easy Crypto also contacted the woman to check she wasn’t the victim of a scam, and received a similar response.

David continued to call daily, and even talked about how the woman’s investment was apparently doing. He also used money from her bank accounts to buy more crypto – in quantities far exceeding what she expected – and stored it in a digital wallet she couldn’t access.

It was several months before the woman realised she’d been scammed and all her money was gone.

“I felt so stupid,” she said.

She immediately contacted Westpac, and her bank accounts were frozen. Two days later she lodged a fraud complaint with police.

Detective Sergeant Mike Freeman, the officer in charge of Canterbury police district’s fraud squad, said an investigation was ongoing. He had dealt with other major cyber scams this year when people had lost up to $700,000, he said, but “this is the biggest one I’ve seen”.

“It’s just heart-wrenching. I feel for the lady – basically her life savings have gone.”

Freeman urged people not to give anyone remote access to their devices, seek professional advice before investing money, and to do business face to face, or not at all.

The woman said she was in regular contact with family members while she was being ripped off, but didn’t tell them about her friendship with David, because she was too embarrassed.

She had told few people what happened, because she felt ashamed and guilty at being deceived by a man she thought she could trust. Those who knew had been supportive, she said.

The woman, who said she’d now have to rely on her pension to get by, urged people to question the motive of any stranger who rang out of the blue.

“Be very, very careful about who you talk to and let other people know what’s going on.”

The woman’s cousin said the scam had been difficult for the family to comprehend.

“The man [David] was like the puppet master pulling the strings. It breaks my heart. If only I’d known earlier.”

Westpac NZ head of financial crime Mark Coxhead said being scammed was “highly distressing, particularly in relation to a loss of this size”.

“We blocked the customer’s initial payments and sought assurances they were legitimate. The customer answered our questions comprehensively and gave firm instructions that we should release her payments, which we were required to do by law.

“When the customer later acknowledged she had been scammed we worked quickly to try to recover any money held by the cryptocurrency exchange but no funds were retrievable.”

He urged people to be wary about unsolicited phone calls, emails, texts and other messages, including those that appeared to come from reputable service providers.

“Scammers can be highly convincing and will use sophisticated techniques to gain the trust of their victims. Customers should beware of any requests for personal details or money, listen carefully to what is being asked, and if in doubt, end contact immediately.”

Easy Crypto’s chief executive Janine Grainge said she was unable to discuss the case for privacy reasons.

However, she said the company had “very robust controls and checks in place to help combat fraud and scams”.

“These include phone or video calls with customers, regular emails, education and security checks, and use of blockchain analytics to ensure that we are using the best tools available to help keep our customers safe.”

Banking Ombudsman Nicola Sladden said there was no doubt “fraud is a growing and significant issue for everyone in New Zealand”.

Fraud complaints were growing year-on-year and increasing in value, she said.

The case highlighted was “very extreme …. one of the highest value frauds [of its kind] I’m aware of this year”.

Sladden said banks had a duty to act on fraud red flags, but also had to “juggle the competing obligations to carry out a customer’s valid instructions”.

“Even when banks identify and act on red flags, scammers often groom customers to give answers banks will accept. Alternatively, customers are so convinced of the legitimacy of the recipient that they will not heed a warning from their bank.”

A bank would not be liable if a customer disregarded its warning, she said.

From July to September 2022, Kiwis were defrauded of almost $9m, the highest quarter loss since records started in 2017, according to the government’s cybersecurity agency CERT NZ. During that period a dozen people lost more than $10,000, the agency said.