[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
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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
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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
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McKinley Lewis, Majority Staff Director
Claire Descamps, Minority Staff Director
C O N T E N T S
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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
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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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