Nigerian fraud hits U.S. pocketbooks

The black Mercedes glides through the sea of ragged women and
children vendors on the sweltering, dirty Lagos street. Someone yells
out, "Here comes a 4-1-9er! Let the 4-1-9er past!" A few of the people
look up and wave or smile. The folk hero's car speeds off to the
affluent suburb of Ikeja, a former residential neighborhood where
buildings now are graced with discreet brass plaques identifying the
headquarters of international investment, real estate and trading
companies.

Expensively dressed young men linger on the street and balconies,
preventing access to the buildings and the companies within, for all but
a select few. Later they will drive in a shiny Lexus or Honda to Allen
Avenue, center of the Nigerian drug trade, to shop in exclusive stores
and conduct other business in the middle class neighborhood near the
Murtala Mohammed International Airport. This is the ruthless, powerful
merchant class of entrepreneurs in the Nigerian Advance Fee Fraud or
4-1-9, named for a section of the Nigerian Criminal Code.

Americans lose $100 million each year to 4-1-9 fraud, although
unofficial estimates of actual U.S. losses are $300 million per year.
Australian, Canadian, Japanese, Malaysian and European police, working
with the United States Secret Service, estimate the worldwide cost at $5
billion during the last 11 years. Unofficial estimates put the figure
much higher.

The Australian Institute of Criminology claims at least 17 deaths
have resulted from foreign businessmen traveling to Nigeria to finalize
business deals or to attempt to retrieve funds lost in the scams. The
travelers can be arrested by military police for improper visas and held
without bail indefinitely under Nigerian Government Decree Number 2 of
1984. The victims have been beaten, tortured, held for ransom and
murdered. Embassy notification of imprisonment does not exist. The
governments of the foreign countries can offer little help, although
U.S. Secret Service personnel have aided in the extraction of American
captives.

TRENDING: End-time plague? River in Israel turns blood red

The 4-1-9 swindle began as a mail fraud sometime following the
country's financial collapse in 1981, although international law
enforcement did not become aware of the schemes until 1989. The first
scams involved oil or black money.

A foreign, established businessman receives a letter explaining that
a chemical had been discovered that can remove the black ink markings
from confiscated counterfeit currency. Once the "black money" is
cleaned, it is negotiable -- and the recipient of the letter can share
in the profits from the sale of the currency.

Unfortunately, the chemical is expensive and the letter writer needs
advance working capital to start production. After starts and stops,
each requiring additional funds, the swindler threatens to expose the
illegal activity to authorities unless the victim continues to
contribute to the scheme. If the victim can be convinced to travel to
Nigeria to finalize the arrangement, he is held for ransom. Families
sometimes pay for the release of fathers or husbands who are already
dead.

Excess crude oil, held by the Nigerian government for taxes, also is
offered to businesses and individuals. Government officials, by special
arrangements, will supposedly reduce the usual tax rate of 75 percent of
the export value, if the oil can be clandestinely released for shipment.
The foreign businessman must advance the hard currency to pay the tax
bill (usually at least several hundred thousand dollars) and expects to
make a profit of 500 percent or more. He is encouraged to visit Nigeria
to finalize the plans -- with extortion as the result.

The original mail fraud letters mutated as more Nigerian
entrepreneurs, often university-educated, discouraged by inflation rates
of 70 percent, evaporation of the middle class, and the cosmetic
"democratic" government elections, obtained copies of the 4-1-9 letters
and went into business for themselves. In Ikeja, businesses sprang-up
to abstract names and addresses from foreign newspapers and business
publications, print the millions of letters needed by the 4-1-9ers,
prepare the mailings and even counterfeit the foreign postage stamps.

Other schemes involving money transfers out of Nigeria to foreign
accounts, set up by the victims, require repeated seed money to permit
the realization of the business transaction. The poorly written letters
are riddled with misspellings; however, they continue to produce
deposits of hundreds of millions of dollars in the Central Bank of
Nigeria. Victims visiting Nigeria may meet with men identified as
Central Bank of Nigeria officials in apparent CBN offices, although the
CBN claims no knowledge of such individuals. Convincing official
documents, complete with government seals and signatures bearing the
authorization of Nigerian government Ministries, complete the
presentations to foreign businessmen.

In any swindle, the most vulnerable point for the criminal is the
"placement," the point of accepting and depositing funds in a financial
institution. Bank wire transfers out of the victim's country to the CBN
can be stopped and monies recovered -- if the halt occurs before the
actual transfer. During the first week of June, U.S. law enforcement
was able to stop at least one sizable transfer from a New York bank.

The 4-1-9ers have now developed a safer -- for them -- method.
Unlike bank wire transfers, when money is presented to Western Union for
dispersal, the funds can be paid out in any Western Union office in the
world. Therefore, while we may think the contact will pick up funds in
Los Angeles, he may choose to pick up the payment in London, New York,
or another city. Even with cooperation of banking and Western Union,
catching the criminal has become more difficult.

The 4-1-9 industry prospered and grew under several Nigerian administrations while each administration expressed dismay
at the actions of the criminal element. On April 1, 1995, President
Sani Abacha signed into law the Advance Fee Fraud and Related Offenses
Degree of 1995. However, the Nigerian Police Special Fraud Unit could
not obtain copies of the new law for several months. Within Nigeria,
the Degree became know as the April Fool Law.

During 1995, the U.S. leveled Limited Sanctions against Nigeria for
several reasons, including a lack of enthusiasm for policing 4-1-9.
Then, in 1998, the curious, untimely death of General Abacha and the
closely followed surprise death of President-elect MKO Abiola (while in
detention) occurred. During the succeeding administration of President
Abubakar, who supposedly had close links to the U.S. military, 4-1-9
activities appeared to remain consistent.

Under FBI Director Louis Freeh's mandate to enlarge the number of
"legats" (legal attache offices) in foreign U.S. embassies, the FBI
opened an office in Lagos. Nigeria's role in the movement of both
heroin (from Southern Asia to Western Europe and North America) and
cocaine (from South America bound for European and North American
markets) is common knowledge in international law enforcement.
According to FBI spokesperson, Mary Johlie, the FBI sees the 4-1-9
revenue as working capital in the purchase and movement of illegal
drugs.

When the American / Nigerian law officers conducting raids burst into
4-1-9 offices, they find computer operators compiling biographies of
corporate officers, doctors, and other businessmen from Internet Web
sites around the world. After compiling the lists of potential victims,
the computer operators send 10,000 to 15,000 email versions of the 4-1-9
letter, reducing their costs dramatically and speeding the process. As
one law enforcement officer said, "If they only get one or two people to
reply, they have done very well. Remember how little money they make in
Nigeria."

After the election of former military ruler (1976-1979) and former
General Olusegun Obasanjo in 1999, Secretary of State Madeleine Albright
traveled to visit this important trading partner. In meetings with the
new democratic government, Albright pledged to increase U.S. Foreign Aid
to Nigeria by 400 percent. If President Obasanjo agreed to offer
official help in the international battle over 4-1-9, that agreement was
not made public.

However, in January 1999, the United States Secret Service opened an
Operation 4-1-9 temporary office in Lagos and, working with Nigerian
police, produced 132 local arrests during that year. It has been
revealed that the Secret Service, as of June 12, 2000, has created a
permanent post in Lagos. The resident special agent will utilize the
information continuously gathered from the FBI and international law
enforcement agencies and coordinate the local arrests of 4-1-9ers. It
appears that the U.S. government expects the 4-1-9 and evolving frauds
to continue to grow in importance.

Unfortunately, the Nigerian government must still prosecute the
criminals. The Nigerian courts show little interest in the offers of
testimony of foreign victims. There is no evidence that a 4-1-9er has
been jailed. In addition, Nigerian 4-1-9ers have set up shop in South
Africa and in Europe. Arrests and convictions of 4-1-9ers also have
occurred in the United States -- of Americans who tried to raise
additional money in an attempt to retrieve their own lost funds in
Nigeria.

Nigeria continues to struggle with international monetary
conversions. The IMF has cut activity to Nigeria, citing the "lack of
transparency" of the Nigerian monetary system, the outstanding $38
billion in foreign debt and the lack of accountability in the management
of the country's $9 billion dollar annual oil revenue. According to an
article in the London Times, western diplomats estimate that Nigerian
leaders have amassed personal fortunes in Lebanese and Swiss banks of
$217 billion over the last thirty years. Although eight percent of the
foreign oil imported into the U.S. comes from Nigeria, the unofficial
Nigerian per capita income is about $280 per year. The government and
IMF use the figure of $1,000, which was a valid number during the early
1980s.

Although the current government is considered a democracy, as in most
non-Western cultures, bribery and corruption remain the common and
expected methods of government. Because of the military and diplomatic
importance of Nigeria in the West Africa region, the industrialized
countries may have little recourse when demanding local aid in the 4-1-9
crisis.

Nigeria with a population of 123 million (one-eighth of the African
continent's population), rich in oil, natural gas, and other natural
resources, may be the keystone of hope for African Democracy. Yet,
almost half the population is under 14 years old, women average 6+
births, life expectancy is just under 54 years, 40 percent of the adult
population is illiterate, the current inflation rate is 15 percent and
the infrastructure of the country is barely functional.

Nigeria's stability is threatened by the civil unrest of the Ogoni /
Shell Oil-Government conflict in the Niger Delta region, Muslim attempts
at implementation of Sharia (Islamic Law) and rising conflicts among the
250 distinct ethnic groups throughout the country. The 4-1-9 industry
and the drug trade offer the entrepreneur one of the few potentials for
release from poverty.

These factors further indicate that solving the 4-1-9 problem will
remain a frustration for international law enforcement -- and a trap for
the international business community.

If you have lost funds in a 4-1-9 swindle, telephone the Secret
Service in Washington, D.C. at 202-406-5850. If you have received an
email 4-1-9 solicitation, fax a copy, marked, "No Financial Loss -- for
Your Database," to the Secret Service at 202-406-6930.

Ardith Morgan is co-author of the book,

Business Opportunities: Secrets Revealed. She and her husband, Herb Morgan, are management and start-up business consultants and write about business fraud.