Three Defendants Arrested on Federal Complaints Alleging They Knowingly Received More Than $13 Million in Scam Victims’ Money

SANTA ANA, California – Three individuals, including two Chinese nationals, were arrested today on federal criminal complaints alleging they set up shell companies that laundered more than $13 million stolen from victims of investment scams known as “pig butchering.”

The following defendants were arrested this morning and are expected to make their initial appearances this afternoon in United States District Court in Santa Ana:

• Mingzhi Li, 24, a.k.a. “Zheng Lin,” of Downtown Los Angeles;
• Zeyue Jia, 23, a.k.a. “Jiao Jiao Liu,” also of Downtown Los Angeles; and
• Jun Shi, 55, of San Gabriel.

The defendants are charged with operating an unlicensed money transmitting business, a felony offense that carries a statutory maximum sentence of five years in federal prison.

Li and Jia are both Chinese citizens who entered the United States on student visas that have since expired; it is believed that they do not have lawful status in the United States.

A federal magistrate judge ordered Li and Jia jailed without bond. Shi was ordered released on $20,000 bond. The defendants’ arraignments are scheduled for March 17 in U.S. District Court in Los Angeles.

According to affidavits filed with the complaints, Shi established both Magic Location Trading LLC and Stone Water Trading LLC on December 7, 2022. Both companies listed the same address in downtown Los Angeles as being their base of operations.

Magic Location and Stone Water allegedly operated as money service businesses that were formed for the purpose of remitting funds on behalf of third-party customers to other entities. The defendants and the companies did so without registering with the Financial Crimes Enforcement Network (FinCEN) or the State of California, as required under federal law.

Shi and Li, using the alias “Zheng Lin,” opened U.S.-based bank accounts Magic Location, while Jia, using the alias “Jiao Jiao Liu,” opened U.S.-based bank accounts for Stone Water. Those accounts received funds from investment fraud victims. In total, law enforcement identified 242 wire transfers to Stone Water that were received from individuals – including identified crime victims – totaling approximately $7,618,982, and 60 wire transfers to Magic Trading totaling approximately $5,405,514, according to the complaint.

The defendants allegedly then transferred those funds to overseas bank accounts and other domestic businesses, transferred money to individuals, and used the ill-gotten gains for personal expenses.

The victims in this matter were attempting to fund what they believed to be investment accounts that they purportedly maintained on digital platforms such as websites or mobile applications. The victims’ investments including commodities such as gold contracts or virtual currency such as Bitcoin.

“Pig butchering” fraud schemes (a term derived from a foreign-language phrase used to describe these crimes) consist of scammers encountering victims on dating services or social media, or through unsolicited messages or calls, often masquerading as a wrong number. Scammers initiate relationships with victims and slowly gain their trust, eventually introducing the idea of making a business investment.

Victims are then directed to other members of the scheme operating fraudulent investment platforms and applications, where victims are persuaded to transfer money for the purpose of financial investments. Once funds are sent to scammer-controlled accounts, the purported investment platform often falsely shows significant gains on the purported investment, and the victims are thus induced to send more money for additional investments.

Ultimately, the victims are unable recover their money, often resulting in significant losses for the victims.

For example, one victim – a 72-year-old Minnesota man – exchanged messages with a Chinese woman on the WhatsApp messaging application. She convinced him to invest in a digital platform called “Enkuu,” according to the complaints. In August 2023, the victim wired $75,000 to Stone Water and, the following month, wired $250,000 to Magic Trading for the purpose of investing in “Enkuu.” He later was unable to withdraw any of his money from “Enkuu.”

A criminal complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The FBI is investigating this matter.

Assistant United States Attorneys Kristin N. Spencer of the Orange County Office and Angela C. Makabali of the Cyber and Intellectual Property Crimes Section are prosecuting these cases.