Litigation partner David Kessler and counsel Ben Klein wrote a Westlaw Today article examining “pig butchering” schemes, including the risks to third party financial institutions and technology companies arising from efforts to hold them accountable for allegedly failing to stop such schemes. In “Pig Butchering and Third-Party Risk – The Widening Effort to Combat Tech-Enabled Fraud Schemes,” published on March 17, the authors outline the mechanics of “pig butchering” schemes, in which fraudsters use sophisticated technologies to develop deep connections with victims in order to present an apparently credible but fraudulent investment opportunity. Although the U.S. DOJ has devoted significant resources to combating this type of fraud—including efforts to identify and notify victims—jurisdictional issues, extradition limitations and limits on authorities’ tools can hinder prosecution efforts.
The authors also examine oversight efforts and novel applications of long-standing laws by third-party actors to pressure the financial institutions, crypto exchanges and social media companies through which these scams are frequently executed. David and Ben suggest that companies review and, when necessary, enhance internal controls for identifying and reporting pig butchering scams.
Litigation associates Amanda Valerio-Esene and Liliana Ramirez assisted in the preparation of this article.
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