Around the time Joe Samuels deposited the last of his life-savings into the Bitcoin ATM in a Hartford convenience store, he began to wonder if he’d made a mistake.
Samuels, an 84-year-old artist and Hartford resident, had found more than $20,000 in his checking account and been told to return it to its rightful owner through a strange kiosk. He hadn’t realized that the money had actually come out of his savings account and that the people telling him to deposit the cash were scammers taking advantage of the untraceable and unregulated world of cryptocurrency.
It wasn’t until Samuels called his son and explained what he’d been doing 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 convenience store, they found every dollar of Samuels’ deposit. In fact, Samuels recalls, it was the only money in the machine. Even still, officers informed Samuels there was nothing they could do — the money had already been converted to Bitcoin and sent off to who-knows-where. It was gone.
Cryptocurrency scams, such as they one that got 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 typically can’t be traced the way a normal 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 advanced a bill that would increase regulation around cryptocurrency ATMs.
“The banks, in general, are regulated pretty heavily,” said Det. Matthew Hogan, who has investigated cryptocurrency cases for the Connecticut State Police. “These cryptocurrency exchanges are regulated but not as heavily, and there are so many ways you can obfuscate the 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. Still, Samuels hasn’t been able to get his savings back.
“Every time I think about it I get sick,” he said. “But I’m amazed at how common it is.”
‘I still can’t believe I was gullible enough’
Samuels’ trouble 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 granted them remote access to the device. They fixed his problem and charged him a small fee.
Months later, he says, he received a strange phone call from someone claiming they’d accidentally deposited more than $20,000 in his bank account and needed him to send it back right away or risk legal action.
Naturally, Samuels was skeptical at first, until he peeked at his checking account and noticed a balance of nearly $22,000, far more than he typically kept there.
“I said to myself, God, they must be right because I don’t have no 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, thinks they must have talked him into sharing his bank information during their correspondence.
Either way, Samuels now believed he needed to return the money as soon as possible. So when the person on the other end of the phone asked him to take out $20,000 in cash and deposit it into a specific ATM in a specific store, using a particular code that would direct it to the right place, he rushed to do so.
Samuels’ bank wouldn’t let him take out more than $5,000 at once, so he wound up darting from location to location, withdrawing the money across four separate transactions. When he finally arrived, cash in hand, at the Bitcoin of America ATM he’d been directed to, he saw no reason to think it was any different from any other ATM. So he began depositing money.
As it turns out, it’s not easy to deposit $20,000 one bill at a time. Samuels wound up spending 45 minutes one day inserting some of the money, then returning the next day for the rest. By the time he was done, his arm was tired.
One of the major selling points of Bitcoin — the most prominent cryptocurrency — is that it is largely untraceable. That quality endears it to those who distrust centralized official currency but also makes it a favorite of scammers and people involved in illicit activity.
When Joe Samuels called Jason, his son, and explained what had happened, Jason immediately alerted the local police, who opened the machine and seized the money. Before long, however, they told Samuels that there wasn’t much they could do. The cash legally belonged to Bitcoin of America. (The Hartford Police detective who worked on the case said in an email that he would not be able to comment publicly until the case was formally closed.)
Hogan, the state police detective, says that within a few minutes of Samuels dropping his cash into the Bitcoin of America ATM, the money was gone.
“Once you put that cash in the ATM machine, it now is property of that ATM, it’s no longer yours,” Hogan said. “You’ve transmitted it, and it’s now turned into Bitcoin.”
‘The overarching concern is consumer protection’
Stories like Samuels’ have increasingly caught the attention of lawmakers and regulators, in Connecticut and elsewhere.
At a national level, legislators from both major parties have suggested various reforms designed to protect against cryptocurrency scams. And at the state level, Connecticut’s banking committee recently advanced a bill that would give the Department of Banking broad authority to regulate Bitcoin ATMs, which would be newly designated as “money transmission” machines. The proposal would also lower transaction limits, which proponents hope would make scams more difficult and less lucrative.
“The overarching concern is consumer protection,” said Rep. Jason Doucette, a Democrat from Manchester who chairs the banking committee. “When I look at this issue, that has to be first and foremost our 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 about the fraud that has taken place has resonated with people,” he said. “So I think we will be acting quickly on this.”
In the meantime, Hogan has a simple message about Bitcoin ATMs, hundreds of which are spread 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 above-board cryptocurrency transactions.
People who fall victim to crypto scams, Hogan said, should contact police immediately, before it’s too late for investigators to act. If turned away by local police, Hogan recommends people reach out to the State Police through a designated email address: email@example.com.
Since his father fell victim to the Bitcoin scam, Jason Samuels has sought help all over — from the police, from the Office of the Attorney General, from the Department of Banking and from anyone else who would listen. He has already reached out to prosecutors in Ohio offering to help with their case against Bitcoin of America.
At one point, Jason Samuels says, he spoke directly with a lawyer from Bitcoin of America, who “was completely dismissive” of his dad’s plight.
“It’s not hyperbole to say this was his life savings,” Samuels said. “As a company, you know that you’re profiting off of scams and fraud, and you do nothing to limit it. It’s despicable.”
Bitcoin of America did not respond to a request for comment.
Joe Samuels, meanwhile, is left with almost no cash to his name. He has significant health problems, including leukemia, and while he says Medicare and Medicaid cover his expenses, his lack of a safety net doesn’t make things easy.
Shortly after losing his life savings, Samuels was hospitalized with a stomach ulcer, which he attributed to stress from losing his savings. His plan, he says, it to move to Georgia with his oldest son, where he’ll try to put the scam out of his mind. Jason Samuels says he has considered starting a GoFundMe page to help his dad cover basic expenses.
Most likely, Samuels will never know exactly who ran off with his life savings. (CT Insider dialed the number that Samuels says had called to confirm receipt of the Bitcoin but was met only with a cryptic automated message.) Instead, he’s left with a sense of shame and a notion that someone should to do something to protect people like him from similar scams in the future.
“I still can’t believe I was gullible enough to even go for it,” he said. “But I’ve had peers and friends of mine who’ve done it worse, so obviously it’s an ongoing thing that’s causing a lot of problems.”