CT man tricked into depositing life savings into Bitcoin ATM
Around the time Joe Samuels deposited the last of his savings into the Bitcoin ATM at a Hartford corner store, he began to wonder if he had made a mistake.
Samuels, an 84-year-old artist and Hartford resident, had found more than $20,000 in his checking account and was told to return it to its rightful owner as soon as possible, through a strange kiosk. He hadn’t realized that the money had actually come out of his savings account and that the people asking him to deposit the money were scammers taking advantage of the untraceable and unregulated world of cryptocurrency.
It wasn’t until Samuels called his son and explained what he had done that the truth began to register.
“My son said, ‘Are you crazy?'” Samuels recalls. “And it clicked in my head, ‘Could this be a scam?’
When Hartford Police opened the ATM at the corner store, they found every dollar of Samuel’s deposit. In fact, Samuels recalls, it was the only money in the machine. Nevertheless, the officers informed Samuels that there was nothing they could do – the money had already been converted to Bitcoin and sent to who-knows-where. It was gone.
Cryptocurrency scams like the one that caught Samuels have become increasingly common in Connecticut, where state police say residents have been defrauded out of millions of dollars. And because transactions using these digital currencies are usually untraceable the way a regular bank transfer can be, the victims of these scams often find themselves with little recourse.
The issue has caught the attention of the Legislative Banking Committee, which recently introduced a bill that would increase regulation around cryptocurrency ATMs.
“The banks are generally regulated quite heavily,” said Det. Matthew Hogan, who has investigated cryptocurrency cases for the Connecticut State Police. “These [cryptocurrency] exchanges are regulated, but not too heavily, and there are so many ways you can hide your money.”
This week, three executives from Bitcoin of America, the company that owned the ATM Samuels used, were indicted in Ohio on charges of conspiracy, money laundering, receiving stolen property and more, after police found they operated more than 50 unlicensed kiosks. Samuels has still not been able to get his savings back.
“Every time I think about it, I get sick,” he said. “But I’m surprised at how common it is.”
“I still can’t believe I was gullible enough”
Samuel’s problems began, at least as far as he can tell, when his computer started acting up.
At age 84, Samuels considers himself “completely illiterate” when it comes to computers, so he called a repair business he found online and gave them remote access to the device. They solved his problem and charged him a small fee.
Months later, he says, he received a strange phone call from someone who claimed they had accidentally deposited more than $20,000 into his bank account and needed him to send it back immediately or face legal action.
Naturally, Samuels was skeptical at first, until he looked at his checking account and noticed a balance of nearly $22,000, far more than he usually had there.
“I said to myself, God, they must be right because I don’t have 22 grand in my checking account,” Samuels recalls.
Samuels isn’t sure how the scammers got into his account and transferred his money from savings to checking. His son, Jason, believes they must have persuaded him to share his bank details during the correspondence.
In any case, Samuels now felt that he had to return the money as soon as possible. So when the person on the other end of the phone asked him to withdraw $20,000 in cash and deposit it into a specific ATM at a specific store, using a specific code that would direct it to the right location, he hurried to do it.
Samuels’ bank wouldn’t let him withdraw more than $5,000 at one time, so he ended up going from place to place, withdrawing the money over four separate transactions. When he finally arrived, cash in hand, at the Bitcoin of America ATM he had been directed to, he saw no reason to believe it was any different than any other ATM. So he started depositing money.
As it turns out, depositing $20,000 one bill at a time isn’t easy. Samuels ended up spending 45 minutes one day depositing some of the money, then returning the next day for the rest. By the time he finished, his arm was tired.
One of the main selling points of Bitcoin – the most prominent cryptocurrency – is that it is largely untraceable. This feature endears it to those who distrust centralized official currency, but also makes it a favorite among fraudsters and people involved in illegal activity.
When Joe Samuels called Jason, his son, and explained what had happened, Jason immediately notified the local police, who opened the machine and seized the money. But before long they told Samuels there wasn’t much they could do. The money legally belonged to Bitcoin of America. (The Hartford Police detective who worked the case said in an email that he would not be able to comment publicly until the case is formally closed.)
Hogan, the state police detective, says that within minutes of Samuels dropping his cash into the Bitcoin of America ATM, the money was gone.
“Once you put the money in the ATM, it’s now the property of that ATM, it’s no longer yours,” Hogan said. “You’ve transferred it and it’s now converted to Bitcoin.”
“The overriding concern is consumer protection”
Stories like Samuel’s have increasingly caught the attention of lawmakers and regulators, in Connecticut and elsewhere.
At the national level, lawmakers from both major parties have proposed various reforms designed to protect against cryptocurrency fraud. And at the state level, Connecticut’s Banking Committee recently introduced a bill that would give the Department of Banking broad authority to regulate Bitcoin ATMs, which will be newly designated as “money transfer machines.” The proposal would also lower transaction limits, which advocates hope will make fraud more difficult and less lucrative.
“The overriding concern is consumer protection,” said Rep. Jason Doucette, a Democrat from Manchester who chairs the banking committee. “When I look at this case, that has to be our primary concern.”
Doucette said he is “very optimistic” that the Legislature will pass a version of the bill during the current session.
“Some of the stories of the fraud that have taken place have resonated with people,” he said. “So I think we will act quickly on this.”
Meanwhile, Hogan has a simple message about Bitcoin ATMs, hundreds of which are scattered across Connecticut: “Don’t use them.” Not only are they often used in scams, he said, but they also charge exorbitant fees, making them a poor way to conduct even overboard cryptocurrency transactions.
People who fall victim to crypto scams, Hogan said, should contact the police immediately before it’s too late for investigators to act. If local police are rebuffed, Hogan recommends people contact state police via a designated email address: [email protected].
Since his father fell victim to a Bitcoin scam, Jason Samuels has sought help everywhere — from the police, from the attorney general’s office, from the Department of Banking and from anyone else who would listen. He has already approached Ohio prosecutors and offered to help with their case against Bitcoin of America.
At one point, Jason Samuels says, he spoke directly with an attorney from Bitcoin of America, who “was completely dismissive” of his father’s situation.
“It’s not an exaggeration to say this was his life savings,” Samuels said. “As a company, you know you’re profiting from fraud and deceit, and you’re doing nothing to curtail it. It’s abhorrent.”
Bitcoin of America did not respond to a request for comment.
Joe Samuels, meanwhile, is left with almost no money to his name. He has significant health issues, including leukemia, and while he says Medicare and Medicaid cover his expenses, the lack of a safety net doesn’t make things easy.
Shortly after losing his savings, Samuels was hospitalized with a stomach ulcer, which he attributed to the stress of losing his savings. His plan, he says, is to move to Georgia with his oldest son, where he will try to put the fraud out of his mind. Jason Samuels says he has considered starting a GoFundMe page to help his father cover basic expenses.
Most likely, Samuels will never know exactly who ran off with his savings. (CT Insider called the number Samuels says he had called to confirm receipt of the Bitcoin, but was met only with a difficult-to-parse automated message.) Instead, he’s left with a sense of shame and a notion that someone should do something about to protect people like him from similar scams in the future.
“I still can’t believe I was gullible enough to go for it,” he said. “But I’ve had peers and friends of mine who have made it worse, so obviously it’s an ongoing thing that’s causing a lot of problems.”
