Chinese scammers used Isle of Man for ‘pig butchering’ scam

A seaside hotel and former bank offices on the Isle of Man were used by scammers to defraud victims in China out of millions of dollars, a BBC World Service investigation has revealed.

The dining room and lounge of the Seaview Hotel in Douglas were packed with dozens of Chinese workers, we were told, in front of computers connected to a high-speed network. A special wok hob had also been delivered to the hotel kitchen.

The deception, which took place between January 2022 and January 2023 according to Chinese court documents, used a method known as “pig butchering.” It is so called because the process of “pig fattening” — gaining the victim’s trust — is essential to its success.

The BBC spent almost a year establishing how the investment scam was carried out from the island, which is a British Crown dependency with an independent government.

We also discovered other details, such as the bosses’ grand ambition to build a state-of-the-art office complex overlooking the Irish Sea.

In addition to obtaining court documents, we gained access to leaked documents and spoke to company insiders.

Jordan (not his real name) told us he had no idea of ​​the murky world he was in when he arrived on the Isle of Man. He was relieved to find what he thought would be a stable administrative job.

However, he noticed that his new employer seemed very secretive: for example, he and his colleagues were not allowed to take pictures at company social events. He had not realized that many of his Chinese colleagues were actually scammers.

By the end of 2021, nearly 100 people had been transferred to the Isle of Man to work for a company that Chinese court documents refer to as “MIC”. They had come from the Philippines, where they had worked for another fraudulent company. The BBC has discovered that MIC stands for Manx Internet Commerce.

In the Isle of Man, MIC was part of a group of associated companies, all under the same ownership.

The most famous online casino, run by King Gaming Ltd, is one of the largest. Gambling is illegal in mainland China. Setting up shop on the other side of the world allowed the group’s founders to target Chinese customers, but also to take advantage of the Isle of Man’s low gambling taxes.

A few months after being based at the Seaview Hotel in Douglas, MIC workers were transferred to former bank offices in the east of the town.

That’s when Jordan says he heard sporadic cheers from his new colleagues, who worked in groups of four. He now believes they were celebrating the moment they had successfully scammed another victim, some 5,000 miles away.

Six people who worked for MIC in Douglas were convicted – upon their return to China – of committing investment fraud against Chinese citizens.

The cases, heard in late 2023, detail the flow of illicit money. The victims were lured by the defendants and their accomplices from bases on the Isle of Man and the Philippines, according to Chinese court documents.

They said the defendants worked as a team to lure Chinese investors into chat groups on QQ, a popular Chinese instant messaging service similar to WhatsApp. One of the scammers played the role of an investment “professor,” while others posed as other investors.

The BBC has seen evidence, including in court documents, that many of the people who arrived in Douglas from the Philippines were involved in scams. They all used the same computer equipment, relied on QQ for their work and, with the exception of a few managers, all had the same job title.

The fake investors created an atmosphere of hype and excitement around the money-making skills of the “professor”, who then asked the victim to place money in a particular investment platform, the Chinese court found.

Dazzled by the hype, the victim would comply, but their funds would then be siphoned off by the scammers, who actually controlled these platforms and could manipulate them behind the scenes.

The Chinese court said it was difficult to verify the victims’ total losses – but said 38.87 million renminbi (£4.17 million/$5.3 million) had been stolen from at least 12 victims.

Relying on evidence including the defendants’ own confessions, as well as travel and financial records and chat logs, the court found all six defendants guilty.

It was not only a profitable scam, but also a sophisticated one, according to court documents, requiring front-line crews to deploy “pig butchering” techniques with persuasion and skill.

The BBC has discovered the identity of the sole beneficiary of these companies. His name was hidden behind layers of administrative documents.

MIC and its subsidiaries were all owned by a trust set up by an individual named “Bill Morgan,” who, according to the documents, was also known as Liang Lingfei. Employees called him “Boss Liang,” Jordan said.

The Chinese court documents refer to a man named Liang Lingfei, who co-founded the MIC on the Isle of Man, which they describe as “a fairly stable criminal organisation set up for the purpose of carrying out fraudulent activities”. Mr Liang is not among those being prosecuted or represented at the hearings.

The court said Mr Liang was also the co-founder of the fraudulent organisation in the Philippines. The BBC has seen evidence that many MIC employees worked there before being transferred to the Isle of Man.

Our investigation also revealed that Mr Liang had obtained an Isle of Man investment visa and had attended several corporate events on the island. His wife also owns a house in the town of Ballasalla, close to the island’s airport.

The Isle of Man group of companies was ambitious, having signed a planning agreement late last year for a headquarters in a “green campus” on the site of a former naval training base. A spokesman for the developers described the investment as “the largest private investment in the Isle of Man”.

Images taken by architects show office blocks perched on a hill overlooking Douglas’ waterfront. Inside were penthouse apartments, a spa, several bars and a karaoke lounge.

The campus was to be used by MIC staff and those working for MIC’s “affiliated” companies, including those involved in online gambling, planning documents say.

By conservative estimates, the global annual revenue of the “pig slaughtering” industry is over $60 billion (£46.5 billion).

“This is the first case of this kind that we have seen in a Western country,” said Masood Karimipour, a U.N. expert on organized crime who usually focuses on Southeast Asia.

He said trying to stop these scams is a “cat and mouse game,” and it’s a battle that “organized crime is winning,” as criminals engage in what he calls “jurisdiction shopping” where they perceive legal loopholes and little oversight.

Any ambitions the group of companies may have had on the Isle of Man – legitimate or not – appear to have come to an end.

In April, police raided the bank’s former offices. They also targeted an address next to the island’s court building, using a ladder to gain entry through a first-floor window in the early hours of the morning.

In a statement released shortly afterwards, police said the raids were linked to a wider fraud and money laundering investigation into King Gaming Ltd IOM. Seven people were arrested and released on bail, they added.

Since then, three other people have reportedly been arrested.

Receivers were appointed earlier this month for the group companies – including MIC and King Gaming Ltd IOM – at the request of the Isle of Man Attorney General.

The island’s gambling regulator has revoked the licenses of MIC-affiliated companies.

The park campus site has been cleared of trees and signage installed – but redevelopment is now on hold indefinitely.

The BBC has made repeated attempts through multiple channels to contact the companies concerned – as well as Bill Morgan/Liang Langfei and the companies’ directors – but has received no response.

We also attempted to contact the Seaview Hotel but received no response, although there is no suggestion that anyone was aware of any illegal activity taking place on the premises.

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