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The 'Psychic Scam': Who is targeted and where the money goes

Ottawa Sun/September 27, 2016

By Viot Pilieci

The U.S. Department of the Treasury’s Office of Foreign Assets Control and the U.S. Justice Department have alleged that PacNet Services Ltd., a Vancouver-based third-party payment processor, has been working with Accu-Rate, a Canadian foreign exchange business and payment processing firm, and other companies to collect money from individuals who fall prey to mail scams.

According to the U.S. government: “PacNet’s processing operations help to obscure the nature and prevent the detection of such fraudulent schemes. In a typical scenario, scammers will mail fraudulent solicitations to victims and then arrange to have victims’ payments (both checks and cash) sent directly or through a partner company to PacNet’s processing operations.  Victims’ money, minus PacNet’s fees and commission, are made available to the scammers through wire transfers from the PacNet holding account and by PacNet making payments on behalf of the scammers, thereby obscuring the link to the scammers.”

But, how does the scam itself work?

Below is an example of what has become known as the “Psychic” mail fraud scheme. The U.S. government alleges that PacNet was used to cash cheques and collect cash in the scheme. Fraudsters allegedly collected more than $180 million U.S. through the Psychic mail scam:

  • Victims are approached online, by phone, in person or even through a traditional letter, with a variety of offers. Some will claim that a psychic has foreseen a positive life event in the victim’s near future or that the victim is about to suffer a seriously negative life event. In some cases, victims are told that there is a message from a recently deceased family member that the sender has been asked to deliver;
  • The “psychic” offers to deliver the message, ensure that the positive life event happens or that the negative event is avoided, for a fee. Often the psychic will offer lottery numbers, the removal of a curse, a lucky charm or ongoing protection;
  • Should the potential victim indicate that they will not pay, the scammer will often play with the person’s emotions, claiming their deceased loved one is disappointed, or threatening to invoke a curse on them to ensure bad luck. A majority of victims in this scam are over the age of 55;
  • Should the victim choose to pay, they write a cheque or place cash in an envelope and send it in the mail. The government alleges the payment is processed by PacNet. PacNet keeps a processing fee for itself, then releases the rest of the money to the fraud artists. On average, scammers are able to squeeze $3,800 out of each victim. Victims are often added to lists, which the thieves revisit with other scams.
  • There are other scams have been identified by the U.S. investigation, including one that claims a potential victim has a large inheritance waiting to be claimed, others state that the potential victim has won some sort of lottery. In either case, there are fees associated with collecting the money that is being offered.
  • The U.S. government has been speaking to PacNet about its role in processing questionable payments since 2002. During a hearing in the U.S. District Court for the Western District of Washington, two of PacNet’s major corporate entities in Canada and Ireland acknowledged that the use of the mail to market lottery chances, questionable financial shares, and other interests within the United States. PacNet also acknowledged that the use of its businesses within the United States to handle payments for these types of fraudulent solicitations, violate U.S. federal statutes.
  • There are other scams have been identified by the U.S. investigation, including one that claims a potential victim has a large inheritance waiting to be claimed, others state that the potential victim has won some sort of lottery. In either case, there are fees associated with collecting the money that is being offered.

The U.S. government has been speaking to PacNet about its role in processing questionable payments since 2002. During a hearing in the U.S. District Court for the Western District of Washington, two of PacNet’s major corporate entities in Canada and Ireland acknowledged that the use of the mail to market lottery chances, questionable financial shares, and other interests within the United States. PacNet also acknowledged that the use of its businesses within the United States to handle payments for these types of fraudulent solicitations, violate U.S. federal statutes.

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