    [Senate Hearing 119-303]
    [From the U.S. Government Publishing Office]

                                                      S. Hrg. 119-303

                                 MADE IN CHINA,
                           PAID BY SENIORS: STOPPING
                        THE SURGE OF INTERNATIONAL SCAMS
    =======================================================================

                                    HEARING

                                   BEFORE THE

                           SPECIAL COMMITTEE ON AGING

                              UNITED STATES SENATE

                        ONE HUNDRED NINETEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 WASHINGTON, DC

                                   __________

                                JANUARY 14, 2026

                                   __________

                               Serial No. 119-22

             Printed for the use of the Special Committee on Aging

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

            Available via the World Wide Web: http://www.govinfo.gov

                                   __________

                      U.S. GOVERNMENT PUBLISHING OFFICE
    62-924 PDF                 WASHINGTON : 2026
    =======================================================================

                           SPECIAL COMMITTEE ON AGING

                         RICK SCOTT, Florida, Chairman

    DAVE McCORMICK, Pennsylvania         KIRSTEN E. GILLIBRAND, New York
    JIM JUSTICE, West Virginia           ELIZABETH WARREN, Massachusetts
    TOMMY TUBERVILLE, Alabama            MARK KELLY, Arizona
    RON JOHNSON, Wisconsin               RAPHAEL WARNOCK, Georgia
    ASHLEY MOODY, Florida                ANDY KIM, New Jersey
    JON HUSTED, Ohio                     ANGELA ALSOBROOKS, Maryland
                                  ----------
                    McKinley Lewis, Majority Staff Director
                    Claire Descamps, Minority Staff Director

                            C  O  N  T  E  N  T  S

                                  ----------

                                                                       Page

    Opening Statement of Senator Rick Scott, Chairman................     1
    Opening Statement of Senator Kirsten E. Gillibrand, Ranking
      Member.........................................................     2

                               PANEL OF WITNESSES

    Nathan Picarsic, Senior Fellow, the Foundation for Defense of
      Democracies, Washington, DC....................................     3
    Kathy Stokes, Senior Director, Fraud Prevention Programs, AARP,
      Washington, DC.................................................     5
    Jacqueline Burns Koven, Head of Cyber Threat Intelligence,
      Chainalysis, New York, New York................................     7
    Seto Bagdoyan, Director, Audit Services, Forensic Audits and
      Investigative Service, Government Accountability Office,
      Washington, DC.................................................     9

                                    APPENDIX
                          Prepared Witness Statements

    Nathan Picarsic, Senior Fellow, the Foundation for Defense of
      Democracies, Washington, DC....................................    28
    Kathy Stokes, Senior Director, Fraud Prevention Programs, AARP,
      Washington, DC.................................................    34
    Jacqueline Burns Koven, Head of Cyber Threat Intelligence,
      Chainalysis, New York, New York................................    43
    Seto Bagdoyan, Director, Audit Services, Forensic Audits and
      Investigative Service, Government Accountability Office,
      Washington, DC.................................................    61

                            Questions for the Record

    Kathy Stokes, Senior Director, Fraud Prevention Programs, AARP,
      Washington, DC.................................................    85
    Seto Bagdoyan, Director, Audit Services, Forensic Audits and
      Investigative Service, Government Accountability Office,
      Washington, DC.................................................    86

                           Statements for the Record

    National Academy of Elder Law Attorneys Statement................    89
    Social Security Administration Statement.........................    91
    Stop Scams Alliance Statement....................................    96
    .................................................................

                                 MADE IN CHINA,
                           PAID BY SENIORS: STOPPING
                        THE SURGE OF INTERNATIONAL SCAMS

                                  ----------

                          Wednesday, January 14, 2026

                                            U.S. Senate
                                     Special Committee on Aging
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 3:32 p.m., Room
    216, Hart Senate Office Building, Hon. Rick Scott, Chairman of
    the Committee, presiding.
        Present: Senator Scott, Johnson, Moody, Gillibrand, and
    Warren.

                     OPENING STATEMENT OF SENATOR
                          RICK SCOTT, CHAIRMAN

        The Chairman. The U.S. Senate Special Committee on Aging
    will now come to order. Today, we're here to discuss a growing
    threat to American seniors and our families. The surge of
    international scams rooted in Communist China and its regional
    criminal networks. Scams targeting seniors are stealing
    billions of dollars from hardworking Americans, and we here in
    Congress have a responsibility to confront them head on.
        The scope of this problem is staggering. In 2024, older
    Americans lost more than $4.8 billion to fraud according to the
    FBI. These are retirees who spend decades working, saving, and
    planning for their futures, only to have their lives upended by
    monsters operating criminal networks overseas.
        As our Committee reports, age of fraud makes clear these
    are not small-time criminals. These are highly organized
    transnational enterprises, many of them directed or enabled by
    the Chinese Communist Party. We know how these groups work.
    They rely on Chinese platforms, Chinese payment channels, and
    scam compounds in Myanmar, Cambodia, Laos, and elsewhere,
    compounds built and staffed by trafficked workers forced to
    carry out scams, targeting our friends Americans.
        Not only is this a disgusting display of our national
    failures to protect human rights, dignity, and security, it's
    also another way Communist China is undermining our country and
    targeting the American people. Beijing has allowed this
    criminal infrastructure to grow and thrive. No matter what you
    believe; indifference, lack of enforcement, or strategic
    tolerance, Communist China is the epicenter of the global scam
    industry that drains American savings and destabilizes
    families.
        I decided to make this the first hearing of the year to
    send a clear message that we will not tolerate any further
    inaction as the CCP seeks to hurt our seniors in what should be
    their golden years. Communist China and criminal enterprise
    network must be stopped. We have common-sense legislation ready
    to go that would make a real difference in combating scams and
    holding those responsible accountable.
        At the end of last year, Ranking Member Gillibrand and I,
    along with our fellow committee members, Senators Ashley Moody
    and Mark Kelly, introduced the National Strategy for Combating
    Scams Act. This bill would finally require a coordinated whole-
    of-government response to fight fraud, recognizing that after
    billions upon billions of dollars are being lost every year,
    it's time we finally get federal, state, and private sector
    partners together under a unified strategy.
        I'm also proud that my Scam Compound Accountability and
    Mobilization, or SCAM Act, was passed by the Senate last month.
    This bill would give the Treasury Department the authority to
    sanction scam compounds and the criminal networks behind them.
    Criminals shouldn't be free to hide behind foreign compounds,
    use Chinese infrastructure, and still access the U.S. financial
    system.
        Additionally, Ranking Member Gillibrand and I are also
    pushing for the GUARD Act. This bill strengthens penalties
    against criminals who target older Americans, and gives law
    enforcement more tools to prevent these crimes.
        These three bills are bipartisan, they're common-sense, and
    they're designed to protect the American people. It's time we
    all come together and get this legislation passed so we can
    stop the bleeding of American dollars to international
    criminals.
        Here's the reality: There isn't a person alive who isn't
    susceptible to Communist China scams. They won't stop unless we
    do something. We cannot continue to sit idly by as these
    criminals harm Americans. Now is the time to take action to
    protect our seniors and every American.
        I look forward to a productive discussion today with our
    witnesses, and now I'd like to recognize Ranking Member
    Gillibrand for opening statement.

                     OPENING STATEMENT OF SENATOR
                 KIRSTEN E. GILLIBRAND, RANKING MEMBER

        Senator Gillibrand. Thank you, Chairman Scott, and thanks
    for calling today's hearing. Welcome, witnesses. I appreciate
    you all being here today.
        In recent years, scams targeting older adults have grown
    more sophisticated and widespread because of the rise of scam
    centers. These centers are fueled by the labor of human
    trafficking victims, new developments in technology, and the
    use of cryptocurrency. Older Americans everywhere are
    vulnerable to the rise of these scams, including my own
    constituents.
        For example, a senior in Jefferson County, New York, was
    convinced through a romance scam to withdraw most of his 401(k)
    funds and transfer the money into cryptocurrency. That is a
    loss that stings. It can derail retirement plans, pull apart
    families, and subject seniors to emotional and material harm.
    Unfortunately, victims can struggle to report scams due to
    stigma and shame. Some communities may face additional barriers
    related to language or fear.
        This hearing focuses on transnational scams that are
    facilitated by Chinese criminal organizations. It is worth
    remembering that Asian immigrants, including many Chinese
    Americans, can be preferred targets for transnational scammers
    because of a common language and culture, as well as their
    familial ties to China.
        We must remember that international scams are worldwide,
    and this phenomenon requires robust and coordinated prevention,
    enforcement, and protection efforts. One positive development
    has taken place in New York. The state's Department of Aging,
    the Association on Aging in New York, and the Silver Shield
    Partnership empower older New Yorkers with tools that allow
    them to instantly perform scam checks via email, text, and
    online to report scams to the FBI and the FTC in one click.
        However, there is still much more work to be done. Last
    year, the Government Accountability Office published a report
    on federal efforts to combat scams. GAO noted an alarming lack
    of coordination amongst federal agencies. Based on
    recommendations from GAO's report, I introduced the National
    Strategy for Combating Scams Act with Chairman Rick Scott, and
    Senators Mark Kelly, and Ashley Moody. Our legislation would
    require the FBI to lead a multi-agency working group to create
    a national strategy to combat scams.
        Last July, I introduced the bipartisan Guarding Unprotected
    Aging Retirees from Deception, or GUARD Act, with Senator Katie
    Britt and Chairman Scott. The GUARD Act will increase resources
    for law enforcement to utilize blockchain technology for
    investigating financial fraud.
        I appreciate the willingness of my colleagues to work with
    me on legislation to combat scams, and I look forward to our
    discussion today. Thank you.
        The Chairman. Thank you, Ranking Member.
        I'd like to welcome our expert witnesses who are here to
    talk about how serious this issue is, and the steps we can take
    to protect our seniors. First, I'd like to introduce Nathan
    Picarsic, Senior Fellow at the Foundation for Defensive
    Democracies. He's a leading expert on Communist China's global
    economic and strategic ambitions, with more than a decade of
    experience analyzing how the CCP weaponizes technology,
    economic leverage, and military/civil fusion to expand its
    influence.
        He was the first Western analyst to document Beijing's
    China Standards 2035 plan. His insights grounded in primary
    source research have informed policymakers and appear in major
    publications including The Wall Street Journal, The Washington
    Post, Bloomberg, and CNBC.
        Thank you for being here. Please begin your testimony.

                  STATEMENT OF NATHAN PICARSIC, SENIOR

                   FELLOW, THE FOUNDATION FOR DEFENSE

                     OF DEMOCRACIES, WASHINGTON, DC

        Mr. Picarsic. Thank you, Chairman Scott, Ranking Member
    Gillibrand, and committee members, for the opportunity to offer
    testimony alongside my esteemed co witnesses.
        As Senator Scott noted, international scams targeting
    elderly populations in America already account for billions of
    dollars of harm annually. Chinese-linked operations play an
    outsized role in executing and supporting these scams, and as
    testimony, I hope to convey three points.
        State-backed scam operations support China's broader
    approach to great power competition. The Chinese government
    plays a role in the proliferation of international scams and
    last, there's opportunity for the Federal Government to lead
    and empower coordination that can disrupt and deter Chinese
    state-backed scams.
        International scams are directly relevant to strategic
    competition. Social cohesion is a pivotal battleground.
    Defending against external attacks on our vulnerable, including
    our elderly, is a fundamental requirement for succeeding in
    long-term peacetime competition. China understands this, and
    China deliberately positions foment, fissures within American
    society, and to tease at American vulnerabilities.
        We know and talk a lot about China's state-backed hacking,
    industrial espionage, foreign information campaigns. Those
    create national security risks for the United States by
    activating a united front that subverts markets captures elites
    and does the bidding of the Chinese State through obscured and
    direct channels.
        The same Chinese campaign also enables the transnational
    criminal forces that execute and redeem profits from elder
    scams in the United States. There's growing awareness of
    China's leading role as evidenced by this hearing, but
    recognition of the full scope of this threat lags, so too does
    marshaling a right-sized response, one they impose of the
    Chinese government for its role and deter attacks on America's
    elderly moving forward.
        State-backed scam has emerged from China, just like state-
    backed industrial espionage efforts. China plays a leading role
    in scams that originate both in China itself and outside in
    hotspots across southeast Asia, for example, where scam
    operations exist and scam compounds operate under Chinese
    leadership.
        China's criminal networks are permitted, and at times,
    abetted by the Chinese State in its ruling Communist Party. The
    leaders of the Chinese Communist Party would much rather see
    criminal acts perpetrated against foreign targets than against
    China's own aging population. Accordingly, the Chinese
    government has allowed China's cottage industry of scam
    operations, including those to target elder victims to exist
    and to excel.
        China's criminal networks offer several fundamental
    advantages. First, China's criminal networks benefit from
    advanced technology. Second, China's banking and sector has
    globalized, allowing China's criminal networks to transfer
    money across borders, obfuscate the flow of funds, and evade
    regulatory authorities. Those advantages fuel Chinese criminal
    underground that is already global.
        Elder scams is a key revenue source for their broader
    criminal ecosystem, and Chinese criminal networks lead the way
    in refining tactics. Pig butchering, for example, has emerged
    as a term to describe cyber-enabled scams that frequently drain
    elderly victims of their savings over a sequence of courtship
    and scamming.
        The practice of pig butchering and its dehumanizing framing
    originated in China. The term was first coined in Chinese. The
    power of the Chinese financial system compounds the threat
    posed by those Chinese tactics and by the Chinese perpetrators.
        The problem isn't just that there's an internationalized
    Chinese banking system. The problem is that the Chinese State
    makes it nearly impossible to reclaim stolen funds. Victims
    often have little recourse after funds have been offshore. The
    systemic nature of China's state-backed scamming amounts to
    great power stakes.
        The United States cannot afford to stand by as Chinese
    criminal networks deplete American social trust and the bank
    accounts of countless Americans. A whack-a-mole response will
    not solve this challenge. State-backed scam networks can outfox
    their targets and the authorities that are invariably playing
    catch up.
        To offset this imbalance, the United States needs to erect
    protections and increase sensing, invest in coordination
    between local, federal, and private sector forces, and enforce
    aggressively against Chinese criminal networks in the arms of
    the Chinese State, including its financial apparatus that
    support them to be able to send a clear deterrent signal to
    Beijing.
        Americans should not be surprised by the Chinese government
    whatsoever. This is the same international actor that decimated
    global public health through their negligence with COVID-19,
    the same actor that hacks the U.S. Government and critical
    infrastructure that maliciously fuels the fentanyl crisis
    ravaging America's heartland, and is building a military to
    challenge the United States and to bully America's allies and
    partners.
        This is not a responsible stakeholder. This is an
    adversary. We should take no pride in treating China with kid
    gloves, or endlessly hoping that they'll mature into a
    responsible actor and worse yet, the state-backed scamming that
    they propel proves that China is an enemy keen to target our
    vulnerable populations. America needs to respond forcefully to
    protect our elders, to support our social fabric as well as our
    chances in long-term competition.
        Thank you again for the opportunity to contribute to this
    hearing and for the work of the Committee to protect America's
    aging population.
        The Chairman. Thank you. Next, I'd like to recognize Kathy
    Stokes, Senior Director of Fraud Prevention within the Fraud
    Watch Network at AARP. It's nice to see you again. Ms. Stokes
    is one of the Nation's leading experts on financial
    exploitation targeting older adults, and she has spent years
    studying the tactics criminals use, the vulnerabilities they
    exploit, and the long-term impact fraud has on seniors and
    their families.
        This Committee has welcomed AARP several times over the
    years. I just want to take a second and say thank you for your
    organization's leadership in this space. Helping educate your
    members helps millions of Americans stay up to date on the
    latest fraud trends and saves innumerable amounts of money.
        Thank you for being here and please begin your testimony.

              STATEMENT OF KATHY STOKES, SENIOR DIRECTOR,
            FRAUD PREVENTION PROGRAMS, AARP, WASHINGTON, DC

        Ms. Stokes. Thank you, Chairman Scott, for inviting me to
    testify, and I want to express my appreciation to you Ranking
    Member Gillibrand and all of the Committee members for holding
    this timely and important hearing.
        My name is Kathy Stokes, Senior Director of Fraud
    Prevention Programs, AARP Fraud Watch Network. I'm here on
    behalf of AARP, and we represent 125 million Americans, aged 50
    and older, and their families, and we deeply appreciate your
    attention to the surge of international scams that are
    targeting our seniors.
        Now, fraud is a national crisis but bigger than most of us
    recognize. The Federal Trade Commission reported $12.8 billion
    stolen in 2024, but the true cost is far, far higher. They went
    back to that $12.8 billion and revised it in December to $196
    billion leaving our economy in a single year to fraud, $81
    billion of that from our Nation's seniors. They robbed victims
    of savings, of independence and security.
        Now, the Fraud Watch Network is on the front lines of
    educating millions of consumers supporting victims and driving
    systemic change. Our helpline receives 500 calls a day from
    those reporting scams, to victims seeking help, and we also
    offer support groups to help victims rebuild their lives.
        We hear from people like Lori, an oncology account
    specialist for a pharmaceutical company. A few years ago, she
    fell in love with a man whom she first met when he reached out
    to her on LinkedIn to ask for advice about moving to her area.
    He then spent months carefully grooming her.
        As her caring and trust deepened, he asked for Lori's help.
    She ended up loaning him $675,000, nearly all of her savings,
    including funds from her 401(k) plan and loans and of course,
    when she finally discovered it was a scam, she was devastated
    and then, she learned that she'd have to pay $225,000 in
    federal taxes on the money that was stolen that she no longer
    has. The massive tax bill forced Lori to file for bankruptcy,
    and the IRS was first in line for payment.
        In addition to fraud prevention through education, AARP is
    leading an effort to change how we talk about and think about
    fraud victims. Our Words Matter campaign shows that blaming
    victims deprioritizes fraud as a crime, and we're seeing real
    movement among consumers, media, industry, policymakers toward
    understanding that fraud is a crime and it's not the victim's
    fault.
        AARP is also proud to be a founder of the National Elder
    Fraud Coordination Center, which aggregates intelligence
    related to elder fraud, to support law enforcement and NEFCC
    recently revived a stalled transnational federal fraud
    investigation when it was able to identify a network of 24
    U.S.-based shell companies receiving victim funds. Indeed,
    transnational criminal organizations drive the expansion and
    the funds they amass represent a national security threat.
        In the sophisticated scam we've already talked about
    originating in Southeast Asia, these Chinese organized crime
    rings are using human trafficking for frontline scammers
    targeting and devastating Americans, forcing many to rely on
    government safety nets in their retirement.
        We're pleased to see solutions proposed by Congress,
    including the introduction of the GUARD Act and the National
    Strategy for Combating Scams Act by the chair, and ranking
    member, and other Senators. These bills seek to improve the
    state and local response to fraud, and better coordinate agency
    efforts, and ensure law enforcement has the tools needed to
    combat these crimes.
        We also advocate for reinstating the personal casualty and
    theft loss deduction as the tax relief for Victims of Crimes,
    Scams, and Disasters Act would do. Victims like Lori who end up
    owing taxes on stolen funds, they no longer end up stuck with a
    bill that they don't deserve and have no way to pay.
    Essentially, they're being re-victimized by the Federal
    Government.
        There is no single solution and every sector has a role to
    play. Individuals can certainly take steps to protect
    themselves and their loved ones. Industry must innovate on
    fraud controls. Tech companies and telcos must build security
    into products so they're secure by design and safe by default
    and the financial services industry must do its part to stop
    their customers from being defrauded.
        Addressing fraud does require a whole-of-society response.
    We can't educate, or engineer, or regulate, or arrest our way
    out of this crisis alone but altogether, we can disrupt the
    fraud business model, protect millions of Americans, and
    safeguard our economy.
        Thank you for your leadership and commitment to protecting
    older Americans, and I look forward to your questions.
        The Chairman. She never met him, right? It was just all
    online.
        Ms. Stokes. Well, they had video. Yes.
        Senator Gillibrand. Oh, he had video chats?
        Ms. Stokes. Oh, yes. He was no stranger in that sense. Yes.
        The Chairman. I wonder if it was really him.
        Ms. Stokes. Oh, it was probably transnational criminal
    organization and they were using deepfake.
        The Chairman. Yes. All right. Now, I'd like to recognize
    and introduce Jacqueline Burns Koven, Head of Cyber Threat
    Intelligence at Chainalysis. Ms. Koven leads the company's
    analysis of cyber-enabled crime, including cryptocurrencies,
    scams, ransomware, and transactional fraud networks targeting
    victims in the United States.
        Her work focuses on tracking illicit financial flows, and
    identifying how overseas criminal organizations, including
    China-linked networks, move and launder stolen funds through
    digital assets. She regularly supports U.S. law enforcement
    policymakers with data-driven insights that help disrupt scam
    operations that recover stolen funds.
        Thank you for being here.

                  STATEMENT OF JACQUELINE BURNS KOVEN,

                   HEAD OF CYBER THREAT INTELLIGENCE,

                    CHAINALYSIS, NEW YORK, NEW YORK

        Ms. Burns Koven. Thank you, Chairman Scott, Ranking Member
    Gillibrand, and distinguished members of the Special Committee.
    Thank you for inviting me to testify on the pressing issue of
    international scams targeting older Americans as an urgent
    matter of national security.
        My name is Jacqueline Burns Koven, and I'm the head of
    Cyber Threat Intelligence for the blockchain data platform
    Chainalysis where we harness the transparency of blockchain so
    that banks, businesses, and governments have the data, and
    investigations, compliance, and security solutions they need
    for this new digital economy to thrive.
        We track cryptocurrency used by illicit actors such as
    those carrying out investment and impersonation scams and
    provide data on their financial activity to private and public
    sector customers include, including the Federal Government.
        Through Chainalysis' unique visibility into the crypto
    economy and illicit fund flows, we see how seemingly small scam
    payments from individual victims are pooled and funneled into
    industrial scale fraud conglomerates. We know that behind these
    transactions, are real people, often seniors who are being
    manipulated into sending their life savings through
    technologies they may not fully understand.
        These scam syndicates are incredibly well-resourced.
    According to Chainalysis data, 2025 was a record year for
    scammers stealing an estimated $17 billion in cryptocurrency.
    Chinese scam conglomerates are undeniably the global market
    leaders in fraud, in large part to their abuse of innovations,
    including crypto and AI, to make their schemes more convincing
    and scalable.
        Everything from social media profiles, mass calling and SMS
    spamming tools, deepfake, and voice cloning, to laundering is
    available in Chinese language underground marketplaces, and
    they leverage cryptocurrency as a form of payment.
    Cryptocurrencies are often the financial rails of choice for
    scammers for the same reasons legitimate users use them.
    Transactions are cross-border and instantaneous.
        I'm here today to emphasize that fraudsters use of
    cryptocurrency should place them at a fundamental disadvantage
    given the traceability and feasibility of many of these assets.
    At Chainalysis, we analyze transaction data from the blockchain
    networks to provide clear information into scam networks and
    laundering at a level of transparency that isn't possible in
    traditional forms of value transfer.
        Blockchain intelligence should be considered foundational
    for understanding the fraud problem at both strategic and
    tactical levels. Law enforcement and regulatory bodies can
    disrupt these networks, cut them off from the global financial
    institutions and make it harder for them to profit by targeting
    illicit entities and networks on the blockchain with sanctions
    and asset seizure.
        Blockchain analytics offers unique opportunities to trace
    proceeds of crime, identify additional victims, and partner
    with the private sector to disrupt illicit networks and pursue
    restitution rather than relying on one-off criminal
    investigations.
        However, despite this huge potential for disruption,
    scammers are exploiting the disjointed and reactive nature of
    how public and private sectors respond to their schemes. This
    crisis requires a unified and technology-enabled response
    preventing Americans from engaging with scams altogether, and
    identifying and dismantling enterprises responsible for
    perpetrating scams.
        As such, my recommendations include, first, the creation of
    a national counter scam strategy, orchestrating a comprehensive
    response, including centralizing scam reporting, streamlining
    coordinated action to dismantle scam conglomerates, and return
    funds to victims in facilitating information sharing between
    the public and private sectors.
        Today's scam victims have multiple agencies they can report
    to, yet, there's no easy mechanism for these agencies to share
    with each other or the private sector of what whose best
    positioned to prevent for additional victims. We need a
    coordinated approach using all levers of government to target
    the scam ecosystem holistically from the money launderers, to
    the fishing kit developers, and data brokers.
        Second, we need to leverage advanced technologies to combat
    scammers' growing sophistication. Too often, scam victims are
    turned away from authorities who are ill-equipped to properly
    assist crypto cases. This challenge also demands a paradigm
    shift from reactive enforcement to proactive disruption through
    AI-powered fraud prevention technology to identify scammers
    before they meet their victims, and empower law enforcement to
    move decisively upstream and take the fight directly to
    scammers.
        Third, we need to provide financial institutions with
    guidance to help them intervene when customers attempt to send
    funds to scams. Clear consistent guidelines could help firms
    navigate when and how they can slow-block, scrutinize scam
    transactions and what form of friction are appropriate without
    overreaching.
        Last, we need to close gaps in AML/CFT standards
    implementation, especially countries that host services
    scammers rely on to launder funds defrauded from Americans and
    in the absence of cooperation, more pressure is needed to
    disrupt the offshore financial networks and the digital asset
    services flagrantly abusing laws and regulatory norms.
        Once again, thank you for the opportunity to provide
    testimony on this important topic, and continue to be a helpful
    partner on initiatives by Congress to better protect Americans,
    especially the most vulnerable. I look forward to your
    questions.
        The Chairman. Thank you. Now, I'd like to recognize Ranking
    Member Gillibrand to introduce the next witness.
        Senator Gillibrand. Thank you, Mr. Chairman. I want to move
    to introduce Seto Bagdoyan. Mr. Bagdoyan is Director for Audit
    Services at The Government Accountability Office's Forensic
    Audits and Investigative Service mission team.
        Mr. Bagdoyan previously served in a variety of positions at
    GAO, including as an advisor in GAO's Office of congressional
    Relations, and as Assistant Director for Homeland Security and
    Justice. He's also served as an congressional detail with the
    Senate Finance Committee, and the House Committee on Homeland
    Security, and in private consultancy positions focusing on
    political risk and homeland security.
        Mr. Bagdoyan, you may begin your testimony.

                 STATEMENT OF SETO BAGDOYAN, DIRECTOR,

                   AUDIT SERVICES, FORENSIC AUDITS &

                   INVESTIGATIVE SERVICE, GOVERNMENT

                 ACCOUNTABILITY OFFICE, WASHINGTON, DC

        Mr. Bagdoyan. Thank you, Chairman Scott, Ranking Member
    Gillibrand, Senator Johnson. I'm pleased to discuss today GAO's
    April 2025 report about scams targeting consumers, including
    older adults and the federal response.
        Scams are a method of committing fraud by employing
    deception or manipulation enabled by technology such as AI to
    achieve financial gain. They involve scammers, often operating
    from foreign countries, as we've heard today, engaging targeted
    victims with a type of scam and requesting payment under false
    purposes.
        One example highlights the scope and reach of scams and
    their financial toll on consumers. A 2023 international police
    operation against online financial crime, including scams,
    yielded over 3,000 arrests and seizures of $300 million in
    assets across 34 countries, including the United States.
        However, the full extent of losses and the risks that
    underpin them is elusive, since these estimates often are based
    on under-reported consumer complaints rather than systematic
    assessments of scam risks and their financial and other
    implications.
        In our report, we noted that given the scope, scale, and
    nature of scams and the risks they pose, the federal response
    falls short on risk management fundamentals. Especially, it
    lacks a governmentwide strategy and a lead agency to organize,
    coordinate, and target multiple activities by individual
    agencies.
        Importantly, and this is very important, there is no common
    definition of what constitutes a scam, and no systematic
    assessment of scams and the risks they pose to consumers.
    Accordingly, there's no assurance that the federal response as
    it is now - is addressing the right risks and the right
    priorities in the right manner.
        A government-wide strategy would introduce risk management
    fundamentals to help ensure that the federal response to a
    significant, dynamic, and sophisticated risk is integrated,
    prioritized, targeted, and adaptable. We made 16
    recommendations to FBI, FTC, and CFPB, the federal agencies
    best positioned to lead the federal response.
        To date, these agencies' responses are mixed. They've
    agreed with some recommendations and disagreed with, or took no
    explicit positions on, others. For example, FBI agreed to
    assume the lead for the governmentwide strategy and outlined
    related initial steps. However, its disagreement with other
    recommendations essential for an effective strategy, such as
    adopting a common definition, is concerning.
        While we acknowledge agencies' positions on these
    challenging undertakings, it's imperative for them to implement
    all recommendations. Otherwise, the governmentwide strategy
    will ultimately be ineffective.
        In closing, scams, including those of foreign origin, pose
    immediate risks of harm to consumers. Accordingly, these risks
    require a decisive, expeditious federal response. The response
    is underpinned by adopting a common definition of scams.
        This serves as the organizing principle for assessing and
    quantifying the risks posed by scams, and crafting and
    implementing a governmentwide strategy to counter them,
    including those of foreign origin. In this regard, legislative
    actions such as S. 3355 would charge the federal response, and
    importantly, establish oversight and ensure accountability.
        Chairman Scott, this concludes my remarks. I welcome the
    Committee's questions. Thank you.
        The Chairman. Thanks for coming, and thanks for your
    testimony. Now, we'll go to the questions. Senator Johnson, if
    you want to start us off.
        Senator Johnson. Thank you, Mr. Chairman. Ms. Stokes, being
    the accountant here, you caught my attention when we talked
    about, is it Lori? She emptied what, her 401(k) account, or
    whatever, $600,000-and-some?
        Ms. Stokes. Yes. It was primarily from her 401(k).
        Senator Johnson. How in the world did she have a greater
    than $200,000 tax liability? I mean, was it gift tax, or was
    it, you know, 10 percent early withdrawal from--I mean, I don't
    understand how the tax penalty could be that high
        Ms. Stokes. I'm not an accountant, so I don't know. I just
    know that it was $225,000, and that was what forced her to file
    Chapter 13.
        Senator Johnson. I would ask you to go back to Lori. I'd
    like to get the details because that makes no sense. I mean, if
    they considered she shouldn't have had to pay anything, I can
    maybe see a penalty for earlier withdrawal, but that'd be
    cruel.
        I mean, she made a loan and she lost her money. If
    anything, she'd get a tax refund on something like that. It
    literally makes no sense to me. I'd really appreciate that.
        Ms. Stokes. Absolutely.
        Senator Johnson. In a number of testimonies, you have laid
    out some of these scams, but we didn't really, other than
    Lori's romantic scam. I'm just asking each of you, what is it?
    What's the hook? Can you give anybody watching this, you know,
    be aware when you see this.
        I'll start with Mr. Picarsic. I mean, what are the two or
    three most common hooks? I'll just go right down the line.
        Mr. Picarsic. Yes. I mean, I think the pig butchering,
    which is similar to the Lori attack sort of confidence scheme,
    and recurring outreach from an actor that you're unfamiliar
    with or that is showing some sort of romantic or unprompted
    solicitation.
        Senator Johnson. You'd say that the romantic one is kind of
        Mr. Picarsic. It's really big. Yes.
        Senator Johnson. Okay. Ms. Stokes, what would you say other
    than a romantic one? I kind of understand that one. What are
    some other ones? Because I want people watching this being
    alert when you see this, when somebody says, you know, like--go
    ahead.
        Ms. Stokes. A big one is a tech support scam where you're
    on your device and you get a popup, and it says that there's a
    horrible problem with your device, and you have to call the
    number that they give. You react immediately because you're
    scared, and you call someone and it's the scammer. It goes from
    there, and it ends up involving accounts and getting money out
    of accounts through wires. It's very, very complicated, but to
    try to echo a little bit of what Nathan said, there are so many
    scams. Like, let's say, there are 80 scams, and each scam has
    red flags, like, say 10 red flags. That's 800 things to
    remember. It's exhausting for educators and for consumers who
    think that they're not going to be able to help themselves,
    right?
        We take it up a level. It's sort of like the stop, drop,
    and roll for fire but this time, it's about recognizing three
    things that come with most scams, and that's a contact out of
    the blue that yields heightened emotion and contains urgency
    and if we can train on that, we can also train how to take an
    active pause.
        Senator Johnson. I would add a fourth. The one that if they
    ask you to call a number, or if they ask you to click on this
    site, would that also be----
        Ms. Stokes. I'm trying to bring it up to a higher level
    there, because there's a million of those.
        Senator Johnson. I mean, that you need to contact them,
    right? I mean, they need you to do something like open up this
    link, or.
        Ms. Stokes. Yes. Click on a link, respond to a call, a
    phone number. We educate millions of people. I would say
    education is critical, but we're not educating our way out of
    this crisis. We need to be doing things to actually stop the
    scam from getting to the consumer to begin with.
        Senator Johnson. Right. Ms. Koven?
        Ms. Burns Koven. Yes. I'll say from our perspective,
    Chainalysis just published research that found that
    impersonation scams have increased 1,400 percent in the last
    year. They're impersonating trusted individuals and entities,
    law enforcement, a known tech company, a cryptocurrency
    platform, or financial institution. Those are the hardest to
    weed out because those are--they are leveraging someone's trust
    in an entity that already exists.
        I would absolutely echo Ms. Stokes' comments that the sense
    of urgency, especially. We're also finding increased payments
    from scammers in cryptocurrency to bulk SMS tools. They're
    coming for Americans on every platform that we rely on coming
    right to our phones and they're buying data lists with names,
    emails, phone numbers of Americans to target in the hundreds of
    thousands.
        Senator Johnson. Okay. Thank you. Mr. Bagdoyan?
        Mr. Bagdoyan. Yes. Thank you, Senator Johnson. I think my
    fellow witnesses have covered most of the space here, but I
    would say investment scams that promise exorbitant returns with
    little or no risk, such as 1,000 percent. I get them by mail or
    text almost on a weekly basis. "Send us $1,000, you'll have
    $1,000,000 by the end of the year."
        Well, that's great, but you know, it goes into the in the
    garbage bin. You have to be alert, if that's just too good to
    be true.
        Senator Johnson. Okay. Well, thank you very much. Thank
    you, Mr. Chairman.
        The Chairman. Senator Warren.
        Senator Warren. Thank you, Mr. Chairman. I want to thank
    you and Ranking Member Gillibrand for holding this hearing. You
    know, falling victim to a scam is devastating for anyone, but
    it can be especially hard for seniors. When older Americans are
    taken advantage of, it's important for them to have someone to
    turn someone who will be on their side, someone who will help
    out, and that's where the Consumer Financial Protection Bureau
    comes in.
        The CFPB is a financial cop on the beat for American
    consumers since 2011. It has saved over $21 billion for
    hardworking families, $21 billion, and that's not all it's
    done. The CFPB has a dedicated office to protect older
    Americans from financial fraud. It also has a consumer
    complaint database where people who've been ripped off can
    report scams and get their money back.
        Mr. Bagdoyan, the Government Accountability Office, GAO,
    just conducted a review of federal scam prevention efforts. Can
    you explain how the CFPB protects Americans from scams,
    including seniors?
        Mr. Bagdoyan. Sure. As you know from our report, we
    identified CFPB as one of the three entities that are best
    positioned to lead the governmentwide strategy that we are
    advocating for. CFPB has the resident expertise. It has the
    legislative charge and mission, if you will. It has the
    experience since the early 2010's, as you noted, so, combined,
    those things are important.
        We made five recommendations to CFPB to further its ability
    to counter scams in coordination, as we mentioned, as part of
    the governmentwide strategy to create the definition of scams,
    to gather better data, to analyze data and find out what the
    real risks are.
        This is a very dynamic environment, but what it has been
    doing--I think it does all 11 categories of activities that we
    identified among the 13 agencies that were in our universe. It
    is well positioned to react through regulatory actions, through
    education, advocacy, and analytics. Again, it justifies them
    being well positioned to----
        Senator Warren. Yes. A lot of opportunities there in the
    way it's structured both to catch the bad guys and to be able
    to respond----
        Mr. Bagdoyan. That's right.
        Senator Warren [continuing]. and to be able to help people
    who've been cheated and get their money back for them. One of
    the points you make, though, is CFPB does not act alone, and
    that the three principal actors in this area are the CFPB, the
    FBI, and the FTC. I think I have that right?
        Mr. Bagdoyan. That's correct.
        Senator Warren. Three of them working together. I think one
    of your recommendations was that they should coordinate even
    more----
        Mr. Bagdoyan. Oh, absolutely.
        Senator Warren [continuing]. in their efforts. Is that
    right? Would you like to just say a word more about that?
        Mr. Bagdoyan. Yes, absolutely. That would be one of the key
    components of a governmentwide strategy. What we found was, of
    course, the 13 agencies that were working independently,
    coordinating on an ad hoc basis, but not systematically. That
    sort of fragmentation really undermines the effectiveness of
    anything any of these agencies do.
        Senator Warren. Not enhancing effectiveness, not more
    efficient when they fragment.
        Mr. Bagdoyan. That's right.
        Senator Warren. Based on what you've said here, you'd think
    that to protect seniors from scams that President Trump should
    leverage the CFPB. Unfortunately, that is not what he is doing.
    Instead, he is systematically dismantling the agency, cutting
    funds, cutting staff, and preventing the agency from doing its
    job.
        Mr. Bagdoyan, let me just ask you, does cutting staff,
    cutting funds, issuing stop-work orders at the CFPB make
    seniors more safe about the same or less safe?
        Mr. Bagdoyan. Well, thank you for your question. I'm glad
    you asked it. It's very timely. As you may know, you submitted
    a request to us for follow-on work on staffing and
    organizational restructurings at the agencies. We may identify
    what kind of impact this would have on agencies' abilities to
    implement our recommendations, for example, and do a better job
    of protecting seniors and others against scams. Ranking Member
    Gillibrand is also a party to that request, and also, Senator
    Hassan, I believe, has joined recently. We staffed that review
    this morning.
        Senator Warren. Oh, good.
        Mr. Bagdoyan. We'll be starting that in several weeks. By
    spring, we should have a decent idea what our strategy to
    pursue that will entail. CFPB is one of the agencies that we
    will review for impacts any of these restructurings, including
    staff reductions, diversions, and other things. Thank you for
    your timely question.
        Senator Warren. Well, thank you very much. I appreciate the
    work you're doing. I want to say a very special thank you.
    Thank you to Senator Gillibrand and to Senator Hassan for
    joining in this effort. You know, if President Trump really
    cared about seniors, he would stop these illegal efforts to
    shut down the CFPB. CFPB is on the front lines trying to
    protect our seniors, and we need to offer its support so that
    it can do that important work.
        Thanks very much. Appreciate it. Thank you, Mr. Chairman.
        The Chairman. Thank you, Senator Warren. Mr. Picarsic,
    based on your research, would you say that the Chinese
    Communist Party is actively benefiting from the billions being
    stolen from American families?
        Mr. Picarsic. Yes. They disproportionately flow back into
    the Chinese banking system, so, yes.
        The Chairman. All right. If we don't stop this, what's
    going to happen over the next five years? Are they going to--do
    you think they'll just continue to get bigger and bigger?
        Mr. Picarsic. Yes. We've seen exponential scaling over the
    past couple years that will continue. Worse, still, will be the
    fact that the cost of capital in the Chinese ecosystem will
    decrease and funds will flow into criminal enterprises, but
    also into the other nefarious efforts that the Chinese
    Communist Party pursues, including modernizing its military,
    modernizing its ecosystem for abusing other human rights.
        The Chairman. It's a pretty good profit center for the
    Chinese.
        Mr. Picarsic. Absolutely.
        The Chairman. Yes. Kathy, how much do you think it is now?
    You think it's almost $200 billion?
        Ms. Stokes. Yes. That's based on the Federal Trade
    Commission's own analysis of underreporting.
        The Chairman. Put that in perspective. We only have about a
    $28 trillion economy.
        Ms. Stokes. I can tell you that if it was a Fortune
    company, it would be Fortune 17 in revenue.
        The Chairman. It's hard to believe. What do you think is
    the single biggest failure in our current federal response that
    allows foreign criminals to keep targeting American seniors?
        Ms. Stokes. Thank you, Senator, for asking that. I would
    say there are so many, but I would start with we need a
    national fraud strategy. We don't have that. We're seeing some
    good indications of having one, having some success in England
    and in Australia, and they look to the United States and say,
    "Okay, who's my counterpart?"
        We have nobody. We need essentially a fraud czar in the
    administration coordinating efforts across the many agencies,
    but also coordinating with a private sector, law enforcement
    using data-driven means of being able to understand how these
    crimes individually tie together to get that organized crime
    connection to make the cases big enough to actually
    investigate, pursue, and prosecute.
        The Chairman. Is there any federal agency that has a
    dedicated group of people doing this?
        Ms. Stokes. I believe there are, yes.
        The Chairman. Okay, but they're not coordinated.
        Ms. Stokes. We could use some better coordination, yes.
        The Chairman. Okay. Ms. Koven, when y'all track stolen
    funds from pig butchering and investment scams, where does the
    money typically flow, and how quickly does it move out of the
    reach of the individual and law enforcement?
        Ms. Burns Koven. Thank you for your question. The funds
    typically aggregate in consolidation wallets. One victim in
    Iowa's funds are commingled with a victim in Florida, with a
    victim from Illinois and we see these smaller payments
    aggregate in these larger consolidation clusters, which signal
    the centralized efforts of these scam conglomerates, and then
    they offboard into Chinese money laundering networks.
        We see the yuan, which had special measures applied to it
    by the Federal Government, as well as other successors,
    guarantee services mostly Chinese language money laundering
    services. We do see a degree of centralized exchanges in DeFi
    services that do receive some of the funds.
        While these movements are pretty rapid, we do have
    opportunities at these consolidation wallets that hold funds
    for longer periods of time. One of the challenges is that
    communication between private sector and public sector,
    connecting that victim in Illinois to that victim in Florida to
    see the bigger picture.
        The beauty of blockchain intelligence is that you're able
    to unravel that entire picture without filing a single subpoena
    and working with private sector law enforcement has had
    stunning successes in seizing funds. Just this year, $15
    billion seized from the Prince Group. We've had examples of
    hundreds of millions seized with the help of cryptocurrency
    exchanges and stablecoin issuers.
        There's a lot of potential, but timing is on the line.
    Timing is at the essence. That's why we advocate for also a
    preventive strategy moving upstream so that scammers never
    interact with a human being.
        The Chairman. When they get the money back, where's the
    money go? How much of it gets back to a victim?
        Ms. Burns Koven. That's a long legal process of you have to
    establish that you were a victim. Thankfully, the blockchain
    has a very clear trail of where a victim withdrew their funds
    in order to deposit it into a scam. I think there could be more
    clarity around that process to streamline it so that victims
    can be made whole.
        The Chairman. How central are overseas networks
    particularly those linked to Communist China and Southeast Asia
    to the cryptocurrency scams targeting American seniors?
        Ms. Burns Koven. Yes. There are several data points from
    the cryptocurrency perspective pointing to China and Southeast
    Asia. The off ramps where these stolen funds are going are
    primarily offshore APAC-based services, Chinese money
    laundering networks where they have mules guarantee services.
    We're also seeing them reinvest their scam profits into
    additional AI tools, additional SMS scamming.
        The Chairman. It's a business model.
        Ms. Burns Koven. Absolutely. It is a corporation. It is a
    well-oiled machine. We also see dips in cryptocurrency scam
    activity during Chinese public holidays and Chinese New Years,
    very much in line with China-based actors.
        The Chairman. When people are working.
        Ms. Burns Koven. Absolutely.
        The Chairman. Okay. Ranking Member Gillibrand.
        Senator Gillibrand. Thank you. Mr. Bagdoyan, in a report,
    the GAO recommended that the FBI be the lead effort to develop
    a national strategy on scams. The legislation that Chairman
    Scott and I introduced, the National Strategy for Combating
    Scams Act, reflect GAO'S recommendation, and it would require
    FBI to lead the interagency effort.
        However, while working on the report, you talked to 13
    agencies that engage in efforts to combat scams, including the
    CFPB and the FTC. Conceivably, one of the other agencies could
    also lead the effort to develop the national strategy. Can you
    explain the GAO recommendation that the FBI lead the effort
    instead of the other agencies like the FTC?
        Mr. Bagdoyan. Sure. Thank you for your question, Ranking
    Member Gillibrand. The FBI, on balance, given all the factors
    that we reviewed, is best positioned to take the lead. They
    actually volunteered to do that while other agencies basically
    demurred either explicitly or implicitly. We took that into
    consideration.
        We did make 16 recommendations to three agencies, as you
    know, but we thought that the FBI, has its scope, scale, its
    investigative capacity, its financial crime section _ which is
    a key unit within the Bureau to tackle these types of crimes,
    including scams _ its authorities and its global networks
    coordinating with other law enforcement. It's a multiplicity of
    factors that position them well to do this.
        Senator Gillibrand. Thank you. Ms. Koven, in furtherance of
    Senator Scott's question about getting remuneration for the
    victims because of the blockchain, what tools would be useful
    in the Federal Government to have to be able to actually recoup
    some of that money? For example, do we need to augment the
    capabilities of FinCEN? Do we need to have a special directed
    unit to do cryptocurrency blockchain investigations for quick
    return of funding?
        What recommendations do you have for us to specifically
    have more tools to use the benefits of the clarity and the
    transparency of the blockchain, but also to create better
    oversight and enforcement?
        Ms. Burns Koven. Thank you for your question. I can't speak
    to any specific agency, but I will say in my experience, there
    definitely needs to be more training and tools using blockchain
    analytics to be able to see the full spectrum of the crime, and
    so that we can holistically tackle the scam ecosystem, not just
    the scammed funds, but the services and infrastructure that are
    that are supporting and underlying these scams, from AI tech to
    data brokers.
        We need to beat them at their own game. We can do that by
    incorporating AI-enabled fraud prevention strategies.
    Chainalysis' Alterya, for example, leverages AI to identify
    scam activity across platforms, payment system domains, social
    media accounts and blockchains. This enables financial
    institutions and law enforcement to identify more victims,
    build a bigger case, identify targets for disruption.
        Frankly, this also allows this data to be integrated with
    financial institutions so that they can prevent scammers from
    even interacting with a human being before they even engage
    with the scam itself. In addition to recovering funds and
    restitution, prevention should absolutely be part of the
    strategy.
        Senator Gillibrand. We frequently hear about the growing
    use of AI, including generative AI in scams that target older
    adults. However, the same technology that helps scammers may
    also be used to combat these scams, as you said. The Australian
    telecommunications firm, TPG, recently used AI chatbots to
    waste the time of scammers. You also discussed in your written
    testimony how Chainalysis has an AI tool that can help block
    scams.
        Can you please discuss further how AI can be used in
    identifying and blocking scams? Do you foresee any new
    opportunities for tools to combat scams based on new
    developments of AI?
        Ms. Burns Koven. Absolutely. Thank you for that question.
    In our recent research, we found that scams leveraging AI are
    4.5 times more profitable than scams that don't. We're rapidly
    approaching a future where virtually all scams will incorporate
    AI to some extent, which is pretty scary stuff when you think
    about the numbers they're pulling in today.
        We do need to fight fire with fire. AI-enabled fraud
    prevention technologies like Chainalysis' Alterya, it leverages
    AI to identify scam activities across domain, social media
    accounts, and blockchains. This can enable financial
    institutions and blockchain companies to be able to integrate
    this into their platform so that they can identify mule
    accounts, victim accounts, and really have a holistic picture
    of the whole scam supply chain.
        Furthermore, law enforcement also needs to have this
    prevention capability and this insight to be able to target
    their efforts against different components of the scam supply
    chain.
        Senator Gillibrand. Thank you, Mr. Chairman.
        The Chairman. Thank you. Mr. Bagdoyan, the GAO said that
    the federal agencies aren't really coordinated. How does that
    impact somebody that's--you know, if they had better
    coordination, how would it save seniors money?
        Mr. Bagdoyan. Oh, that's a good question. There might be a
    way to cross reference approaches by a particular older
    American who goes to the FBI, because that makes sense to them,
    when the FTC might be better positioned to help them, or the
    CFPB for that matter, or some other agency.
        There isn't a close-knitted approach to doing that, for
    example. I mean, that is a basic service that should be
    available. It isn't available. There are some agencies that
    accept consumer complaints, but they will refer the consumers
    to their own online educational materials, for example, rather
    than saying, "Well, thank you for your call, but you should
    have gone to X." I don't think that's happening.
        The Chairman. Mr. Picarsic, given your research on CCP, is
    it fair to say that the Communist China, the party, tolerates
    or turns a blind eye to these scam compounds because they want
    to weaken the United States?
        Mr. Picarsic. That's the most generous interpretation, that
    they turn a blind eye. I think more nefariously, they actively
    support and abet whenever they have a chance to.
        The Chairman. How can you describe the level of
    coordination between these Chinese criminal networks and
    Communist China's broader geopolitical goals?
        Mr. Picarsic. They look to produce profits that can flow
    back into the Chinese ecosystem. They look to generate the
    capacity to project misinformation, and to sow dissent, and
    divide in the societies that they target. That may be the ones
    where they're operating from and maybe the ones that they're
    targeting.
        We see from the layout, the geographic layout, the places
    that get populated with scam compounds tend to coincide with
    the places that dot the Belt and Road Initiative that have
    presence of Chinese international banking operations and all of
    these work together, perhaps not with smoking guns appearing at
    every turn, but with a whole host of loaded guns that can be
    pulled when they need to be.
        I think the recent case that's been cited of the Prince
    Group is a telling example of a massive operation that was able
    to evade scrutiny in Cambodia for a long time. We recently
    indicted the leader. He was extradited not to the United
    States, not to our authorities, but to the Chinese.
        He was able to be extradited to China because the Chinese
    government is active in courting Cambodian business and
    political elites. These channels all overlap, and when, and if
    they're needed to coordinate and work together, they do.
        The Chairman. If Beijing wanted to shut this stuff down,
    could they do it?
        Mr. Picarsic. They absolutely could. For better or worse,
    they respond only to shows of strength and declarations of the
    capacity to control escalation dominance. For that reason, I
    think that American strategy needs to target the international
    presence of Chinese banks.
        It's commendable that several pieces of legislation that
    the Committee's advanced cite IEEPA authorities, those
    authorities should be invoked and they should be used to target
    seizure of Chinese banking and Chinese banking leadership
    assets present in the United States.
        The Chairman. Based on what you're saying, you would not
    suggest we ever buy things or do any business with China, is
    that----
        Mr. Picarsic. Absolutely. I think we have a consensus
    around strategic goods and the national security supply chains.
    Across the board, American societies depend on Americans
    working together and American businesses thriving at all
    levels. If we allow even our most non-strategic assets to be
    fully offshore to an adversary, we're imposing on ourselves,
    for no reason, that opportunity cost.
        It's not just the cost of that sector. It's the opportunity
    cost of that sector thriving somewhere else and not
    contributing directly to American society.
        The Chairman. Kathy, can you talk about you--I know AARP's
    putting a lot of effort into this. Can you give a success
    story?
        Ms. Stokes. Well, we probably talk to about 100,000 people
    every year through our helpline and we're not in a position--
    we're not law enforcement, we're not social workers, but we are
    able to talk to people in a sort of shame-free zone. We can't
    get their money back, but we can offer emotional support and we
    created a fraud support Zoom session, small group Zoom
    sessions, several years ago. Some of the people that have come
    through are here with me today.
        What we do see in the success is that people begin to
    understand that it wasn't their fault, that they're not alone.
    They rebuild a sense of self. They build a sense of agency, and
    then they want to do something about it. We have victims
    telling their own narratives to law enforcement, to industry,
    to try to help people understand from that victim impact stance
    how nefarious these are.
        The Chairman. Yes. Probably if somebody was a victim, it's
    probably better opportunity than somebody would listen to them
    also. Right?
        Ms. Stokes. Well, we have a YouTube series called Fraud
    Wars that we just launched at the end of--well, actually, it
    was last summer. It's like these little 11 or 12 minute very
    highly produced videos, and it's the first-person narrative.
    They're very captivating.
        The Chairman. Ms. Koven, based on your analysis, can you
    describe the lifecycle of a typical crypto-enabled scam
    targeting seniors from the first contact to a final launder in
    the funds? Give us an insight of how it happens. Let's say I'm
    the victim and you're trying to take advantage of me.
        Ms. Burns Koven. Thank you for the question. We don't often
    see the full lifecycle. Sometimes, we get information after the
    scam has already occurred. I can say that we are able to use
    our analysis to find when a victim makes recurring payments,
    and we've been able to do analysis on specific scam typologies,
    separating out pig butchering, versus blackmail, and extortion
    scams, from other scam typologies to understand which scams
    elicit recurring payments from a victim so we can see how
    effective they are in continuing to bleed out victims of their
    life savings versus ones that are shorter-term.
        We are seeing a growing number of scam typologies, which I
    think is really interesting in the conversation of defining
    what a scam is because these scammers are relentless in
    capitalizing on new technologies, new flavors of the day. We're
    seeing different typologies leveraging working from home, for
    instance, which is a different on chain presence than maybe an
    impersonation scam, and we see the typical services recurringly
    used for laundering.
        The blockchain shines a bright light on these services that
    continue to operate and process scammed funds. While the
    special measures on huawan, for example, are very encouraging,
    as the largest, most prominent service that facilitated scams,
    there are others there are definitely successors waiting in the
    wings and know that scammers hedge their bets and are present
    on multiple different underground forums and guarantee youth
    platforms to continue their operations.
        Anything that injects friction in these conversations,
    injects friction in their laundering, their trust in the
    different services, and imposes cost on all the key components
    of the supply chain are welcome and should be part of a
    national strategy.
        The Chairman. Is China and Southeast Asia, are they a
    majority of the scammers?
        Ms. Burns Koven. I would say it's certainly a model that is
    highly effective. Not all scams originate from China or
    Southeast Asia, but it is setting the model for what we fear
    other jurisdictions, other scammers, other organizations could
    adopt.
        The Chairman. Is information sharing helpful?
        Ms. Burns Koven. Absolutely. I appreciate this Committee's
    attention on ways we can streamline information sharing. There
    are so many different entities where a victim can report their
    scam, but also many don't.
        The blockchain is effective in highlighting payments of
    victims that may have not reported. We should use that
    intelligence to drive our mission to be able to instead of one-
    off investigations, we grow the amount of funds that are
    feasible and reduce friction amongst these agencies.
        Overall, we have to increase a public-private sector
    information-sharing too. Because a private sector entity, say a
    financial institution, that files a suspicious activity report
    about a scam on their platform, the bank next door will never
    get wind of what was in that scam.
        They're encountering the same adversaries. Their customers
    are being targeted by the same adversaries, yet, they cannot
    share information. Private sector is best positioned to prevent
    future scam victims. We need that quick information-sharing,
    and the whole-of-government, as well as whole-society approach.
        The Chairman. Ranking Member Gillibrand.
        Senator Gillibrand. Ms. Stokes, can you talk a little bit
    about the proposal to have local elder justice task forces?
    What effect do you believe these task forces could have on
    efforts to combat scams?
        Ms. Stokes. Thank you, Senator, for the question. I think
    they're critical. The elder justice task force model allows for
    coordination among local, state, federal law enforcement,
    prosecutors, also agencies of adult protective services, things
    like that. It helps the ability for data to be gathered and
    assessed to be able to start to see patterns. That's that
    pattern that we're missing right now because we're not looking
    at it through an organized crime lens.
        I have many examples from the San Diego Elder Justice Task
    Force that they've done some amazing things, very much because
    they are an elder justice task force, and they are looking at
    data and being able to understand tying things together and
    going after big cases. I think it's really important.
        Senator Gillibrand. What are the biggest barriers for
    seniors to come forward to report when a scam has happened?
    What are their barriers for seeking help, and what are the best
    ways to help them rebuild their lives after a scam? You
    mentioned the relationships and the communities you're creating
    throughout AARP. I think that's really terrific.
        I do think we should, for example, the person that you
    talked about who lost all that tax money, I could get that tax
    money back for her. I think we should have lawyers who can make
    the case that through artifice and fraud, they do not owe
    taxes. At least she'd get that $200,000 back, so she'd have
    part of her savings. Maybe even having legal services available
    for scam victims to get some kind of recuperation.
        Ms. Stokes. Yes. Thank you, Senator. She's certainly not
    alone. We have many victims that come through this process, and
    because the money was taken from a tax deferred retirement
    plan, they end up owing the taxes because the IRS looks at it
    as income.
        Senator Gillibrand. We can probably change that law.
        Ms. Stokes. We would like to see that changed. There's a
    bill out there now, as a matter of fact.
        Senator Gillibrand. Yes. Well, I'll work on that, and I'll
    also work on your task force bill.
        Ms. Stokes. Thank you very much. In terms of the barriers
    for victims, one of the barriers is sort of internal. They're
    so ashamed, so embarrassed, they think it only happens to them.
    That comes from a society that has tended to blame victims for
    the crime that has happened and we've done that for years, and
    we've allowed ourselves to believe that it's only old people
    who aren't tech savvy, who may have cognitive issues and so
    it's sort of a them problem.
        Now we're starting to understand that it's an all-of-us
    problem because everybody is being targeted. You don't have to
    have cognitive decline because of the sophistication of the
    playbook that the criminals use. We're seeing some change
    there, and then the other is there's just too many calls to
    action. You know, you could report it to the FBI, and FTC, and
    the Social Security Administration, and everything else. We
    need a single door that consumers can go to, victims can go to,
    not only to be able to report, but to report it into a law
    enforcement system where the data are going to be connected to
    other reports so that we can begin that be better at the
    organized crime connections there.
        Also importantly, so many people that report they never
    hear anything, especially if they report something online.
    They're expect--they're hoping for a call. We need a system
    where people are treated with dignity and respect, and that
    there is some outreach that lets them know what's going on,
    even if nothing's going on, to make them feel less like it was
    their fault.
        Senator Gillibrand. Mr. Picarsic, can you talk a little bit
    about what type of international joint ventures we should be
    trying to have with our allies? I'm certain it's not just
    American seniors who are being targeted. I'm sure it's true
    across the whole globe but I can imagine if we had
    international coordination with the UK, or some of our EU
    allies, or Asian or Middle Eastern allies, we could crack some
    of these criminal networks a lot quicker.
        Do you have any recommendations for us with regard to
    coordination of investigations?
        Mr. Picarsic. Thank you very much for the compelling
    question. I think it tracks with the way that we've been able
    to share information, increase early warning, and coordinate
    action in similar realms of criminal activity, including cyber
    threats. The way that across our international relationships,
    we've been able to build multilateral fora and support law
    enforcement.
        I think it starts with information-sharing and we have
    existing fora from cyber, and counterfeit, drug, and counter
    smuggling activities that can be activated the same way. I
    think it's a compelling priority, and one that we have
    infrastructure to pipe the right information through.
        Senator Gillibrand. Then last, can you just explain why
    human trafficking is often associated with these types of
    scams?
        Mr. Picarsic. Yes. Chairman Scott has mentioned just how
    profitable and good a business these operations are. Part of
    their fundamental orientation is that they're leveraging
    trafficked humans so that they don't even have a payroll. They
    tend to be populated, again, in these territories where there
    may be lax oversight and are hotspots for human trafficking.
        Then there's overlap with the actual people leading
    compounds and moving money with human trafficking. They're able
    to take forced labor and employ them in compounds, and also, to
    shield themselves from any scrutiny from local as well as
    Chinese authorities.
        Senator Gillibrand. Terrible. Thank you, Mr. Chairman. Yes,
    I'm done.
        The Chairman. Senator Moody.
        Senator Moody. Thank you, Chairman Scott, and Ranking
    Member Gillibrand. Such an important topic to all seniors in
    America, especially my home State of Florida. We are a premier
    destination state for seniors moving there in retirement. We
    often call ourselves not just the Sunshine State, but the
    Silver State and as technology has advanced so rapidly the
    tools that criminals will use to scam our seniors has
    multiplied.
        I realized this very quickly in my background. I served as
    a federal prosecutor, as attorney general. I understood very
    quickly that the federal standards sometimes for investigation
    and prosecution in terms of monetary loss, the bar to reach
    that becomes so high that we're often, if we're not aggregating
    smaller amounts to show these larger losses in the aggregate,
    sometimes those fall through the cracks.
        It's oftentimes those lower amounts and I say lower only
    because it's relative to the sometimes hundreds of millions of
    dollars we might see in one scam compared to if you aggregate,
    let's say numerous seniors get taken advantage of. It could be
    their life savings and even when you aggregate that, it could
    be a lot, but if you don't know that they're related, it might
    seem not to reach the federal levels of investigation.
        What I found very quickly, a huge gap in enforcement
    investigations, prosecutions, bringing criminals to justice, is
    the inability of states to match sometimes the manpower and
    coordination at the federal level, the capabilities to go after
    these people.
        As Florida's AG, one of the first things I did was put
    together a cyber fraud enforcement team to start looking at
    these things to cooperate with the federal officials, but start
    bringing in experts into the investigation side and the
    prosecution side because both are so important, and it does
    require a specified expertise.
        We saw results immediately, not only in going after those
    that might have fallen through the cracks, those specific cases
    but also recovering funds, freezing assets, even
    cryptocurrency.
        I think this is so important, and I'm so glad, Chairman
    Scott, thanks to have these hearings because oftentimes it's
    foreign nationals that are using this advancing technology to
    victimize Americans, Floridians, and they're never brought to
    justice because they're overseas and we become put in a
    position where we're just trying to prevent, educate and that's
    so important, but we have to have the teeth to come back and
    hold these people accountable.
        I have totally foregone anything I planned to ask, but I
    would just like to get from you. We did this as kind of it was
    an initiative in Florida. It is now bearing fruit. It's still
    in existence. They're freezing funds. They're going after
    people.
        In fact, just recently that that same cyber fraud
    enforcement unit that I started seized $1.5 million connected
    to an internet-based investment scheme that was perpetuated by
    a Chinese national. I'm so proud of what we were able to
    accomplish there.
        I would like to open this up, with the chairman's
    permission. If any of you could comment on how I often am very
    reluctant as an idea to just throw more money at a problem but
    if the goal is to get more states to start their own cyber
    fraud enforcement units that can coordinate with the feds, but
    also begin to bring their own expertise to bear and start these
    units to help their state, their county and city.
        If you have a state cyber fraud enforcement unit that can
    lay over expertise in rural counties and cities that might not
    have that. It was so effective in Florida and I'm wondering if
    any of you believe or have recommendations on how we, as a
    Federal Government, might encourage more state cyber fraud
    enforcement groups.
        I saw how effective that was at filling the gap in Florida.
    Anyone want to chime in on this? Do you have any
    recommendations, for us as Senators, on how we can make that
    happen?
        Ms. Burns Koven. Thank you for your questions, Senator. I'm
    delighted to hear about some of the successes you've had.
    That's fantastic. Because you've laid out some vast challenges,
    right, which is information-sharing, connecting a victim in
    Florida to the same scam of somebody out of state or even out
    of the country.
        Blockchain analytics has been the common language and
    visibility for so many successes for scam funds recovery,
    putting crossing that bridge between private and public sector
    so that a private sector can prevent additional scam victims
    from falling prey but I think more so we need to make sure
    state, local, and federal law enforcement, and regulators have
    the tools and training they need to be able to understand
    crypto cases.
        We hear often that victims are turned away because they
    don't know how to investigate crypto cases, or that the case is
    too small to meet a threshold, when in reality, that one scam
    victim sends funds to a multimillion-dollar scam conglomerate
    where there's a ripe opportunity for intervention and asset
    seizure.
        In addition to recovering funds and restitution, we also
    have to bring the fight to the scammers. We need to focus on
    prevention, making sure those scammers never interact with a
    human and we can do that through AI, which Chainalysis'
    Alterya, for example, leverages AI-enabled fraud prevention to
    be able to collect scam identifiers from across online
    infrastructure, from platforms, from payment systems, from
    domains, to social media.
        Being able to connect victims but also identify scam
    infrastructure so that financial institutions and crypto
    businesses don't even permit that activity on their platform.
    It also is enabling for law enforcement to better target for
    disruption, what are the key nodes that are underlying this
    scam ecosystem.
        Senator Moody. Thank you. I have to say, my staff told me
    you would know a lot about that. I appreciate it. Thank you for
    making them look really good. I wish I could show you. It says
    right here, "Ask Ms. Burns Koven." Thank you very much and to
    all of you for being here today. We really appreciate it.
        The Chairman. Thank you, Senator Moody. I want to thank
    everybody for coming today, being and participating. I also
    want to remind seniors and families watching that the Senate
    Aging Committee operates a fraud hotline for anyone who
    believes they may have been targeted or victimized. The number
    is 1-855-303-9470. Nice, easy number to memorize.
        If any seniors or any Senators have additional questions
    for the witnesses or statements to be added, the hearing record
    will be open until next Wednesday at 5:00 p.m. Thanks,
    everybody.
        [Whereupon, at 4:48 p.m., the hearing was adjourned.]

                              [all]

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                                    APPENDIX

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                          Prepared Witness Statements

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                            Questions for the Record

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                     U.S. Senate Special Committee on Aging

     "Made in China, Paid by Seniors: Stopping the Surge of International
                                     Scams"

                                January 14, 2026

                            Questions for the Record

                                  Kathy Stokes

                            Senator Raphael Warnock

        Question:

        According to the Federal Trade Commission, financial fraud
    was more prevalent in Georgia than in any other state in 2023,
    with 437 incidents per 100,000 individuals. In 2023, Georgians
    aged 60 and older reported losses of over $92 million to the
    Federal Bureau of Information's Internet Crime Complaint
    Center. To address this issue, I co-introduced S. 2019, the
    Task Force for Recognizing and Averting Payment Scams Act,
    which would establish a multi-agency task force to examine
    fraud trends and lead prevention efforts. Last Congress, I also
    reintroduced the Empowering States to Protect Seniors from Bad
    Actors Act, which would create a new grant program to protect
    senior investors.
        How would multi-agency coordination and federal grant
    programs focused on investigating fraud protect Georgia seniors
    from financial scams?

        Response:

        Multi-agency coordination is critical because today's fraud
    schemes rarely fall neatly within the jurisdiction of a single
    agency. Scams targeting older adults often involve online
    platforms, financial institutions, telecommunications
    providers, and, in many cases, actors operating across state or
    national borders. A coordinated task force, such as the one
    that S. 2019, the TRAPS Act, calls for, would bring together
    the expertise and authorities of agencies such as the FTC, DOJ,
    FBI, and state attorneys general to share data in real time,
    identify emerging scam trends, and respond more quickly when
    patterns of fraud begin to appear. This kind of coordination
    helps move the response from being reactive-after money is
    lost-to preventative, stopping scams before they spread widely
    in communities like those across Georgia.
        Federal grant programs, such as contemplated in the 118th
    Congress' Empowering States to Protect Seniors from Bad Actors
    Act or 119th Congress' S. 2544, the GUARD Act, or H.R. 6426,
    the Stop Scams Against Seniors Act, play a critical role by
    ensuring that states have the capacity to act on that shared
    intelligence. Many state and local agencies, including those in
    Georgia, are on the front lines of protecting seniors but lack
    the dedicated resources to investigate complex financial fraud
    cases or to conduct sustained outreach and education efforts.
    Grant funding can support specialized task forces,
    investigators, partnerships with financial institutions to flag
    suspicious transactions, and community-based education programs
    that help older adults recognize red flags before they become
    victims.
        Thank you for your leadership on this issue. We are
    experiencing a fraud epidemic and it is critical that we work
    together to prevent seniors from being exploited in the first
    place, as well as provide the necessary support when fraud does
    happen.

                     U.S. Senate Special Committee on Aging

     "Made in China, Paid by Seniors: Stopping the Surge of International
                                     Scams"

                                January 14, 2026

                            Questions for the Record

                                 Seto Bagdoyan

                            Senator Raphael Warnock

        Question:

        A recent report from the Government Accountability Office
    identified the Federal Trade Commission (FTC), Consumer
    Financial Protection Bureau (CFPB), and the Federal Bureau of
    Investigation as the federal agencies best positioned to lead a
    government-wide strategy on anti-scam efforts. As you know,
    President Trump fired the two Democratic Party members of the
    five-member FTC in March 2025, and the administration has
    attempted to eliminate the CFPB.
        How have these disruptions to the federal workforce
    affected the capacity of these agencies to combat scams
    targeting older adults?

        Response:

        In April 2025, GAO issued a report (GAO-25-107088)
    identifying federal efforts to prevent, detect, and respond to
    scams. We made 16 separate recommendations to the Consumer
    Financial Protection Bureau (CFPB), Federal Trade Commission
    (FTC), and the Federal Bureau of Investigation (FBI) to better
    prevent, detect, and respond to scams. Specifically, we
    recommended that the FBI lead a U.S. government effort to
    develop and implement a governmentwide strategy to counter
    scams and coordinate related activities. We also made
    recommendations to CFPB, FTC, and the FBI related to improving,
    in collaboration with each other, how they collect and report
    data on scams.
        Pursuant to Standards for Internal Control in the Federal
    Government, agency management is responsible for recruiting,
    developing, and retaining competent personnel to achieve the
    agency's objectives. A lack of competent personnel can result
    in skill gaps, which occur when agencies have an insufficient
    number of individuals or individuals without the appropriate
    skills or abilities to successfully perform their work. GAO's
    2025 High Risk List notes that skills gaps within agencies
    impede agencies from cost effectively serving the public and
    achieving desired results. GAO has also previously issued work
    on assessing government reorganization efforts (GAO-18-427). As
    the report notes, strategic workforce planning should occur
    before any staffing changes to avoid creating skill gaps or
    other adverse effects that could impair agencies' ability to
    carry out their missions.
        GAO has not yet evaluated the impact, if any, of recent
    administrative and personnel actions at CFPB, FTC, and the FBI.
    On July 7, 2025, Senators Kirsten Gillibrand and Elizabeth
    Warren-later joined by Senator Maggie Hassan-requested GAO
    examine the impact of recent administrative and personnel
    actions on the ability of the federal government to address
    fraud and scams and implement the recommendations from our
    April 2025 report. GAO recently staffed this engagement and
    will commence work very soon.

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