Dear Sir or Madam: Lottery scams proliferate

Advanced fee fraud scams are on the rise, far outpacing law enforcement's ability to keep up.

One fee was ostensibly a deposit to ensure he wasn't laundering money. That bill was sent on fake United Nations letterhead, from the "Department of the Anti-terrorist Team," supposedly based in Bangkok.

Ericson is not likely to ever see his money, said Henning Nielsen, chief detective inspector for the economic crimes department with the Danish police outside Copenhagen, who investigated the case.

The fraudulent e-mails are usually sent from public cafes or libraries with PCs, which makes it very difficult to find the actual person who sent the e-mail, Nielsen said. Ericson also sent his money using Western Union's money transfer service, which is harder to trace.

"We couldn't follow the money," Nielsen said. "If he had used a bank, we could follow the money through the accounts. We couldn't do that because it was Western Union."

There are indications that fraudsters have started Western Union franchises in order to make it difficult for investigators, Engelsman said. Since a person just needs a reference number and an ID to pick up money, the system is opaque, especially if an accomplice is not doing proper ID checks.

"The majority of money is laundered through cash points and Western Union and MoneyGram agencies," Engelsman said.

Western Union declined to make a security official available for this story. But Anja Reitermann, vice president for corporate affairs for Europe, the Middle East and Africa, said the company doesn't vet people's backgrounds before they send money.

Microsoft and law-enforcement agencies of other countries have reached out to Nigeria's Economic and Financial Crimes Commission (EFCC), the key agency in charge of fraud-related law enforcement. While praised for its early efforts, the agency has gone through a recent reorganization that left observers hoping it stays on track, Engelsman said.

Multiple efforts to reach officials at the EFCC were unsuccessful.

The continued increase in the number of scams will far outstrip law enforcement's capacity to investigate. Fewer than 1 per cent ever receive police attention, Engelsman said. In 2007, Ultrascan estimated that 520,000 people among the UK's 60 million population paid some sort of advance fee.

Building a complete case against a network of scammers can take up to a year, Engelsman said. Additionally, many skilled law-enforcement agents have been reassigned in recent years to antiterrorist-related units, and other talented cops end up going to the private sector where they're better paid, Engelsman said.

Le Toquin of Microsoft said the investigations require cross-border help, which can pose legal complications: "It's time-consuming. It's not impossible, but obviously it's hard work."

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