Weekend Listen: The Rise and Fall of an Alleged Scam Boss

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1:29Prepare by BlackRock Investments, LLC. Bloomberg Audio Studios. Podcasts. Radio. News. This January, Chinese state media treated viewers to a gripping spectacle. The arrest and public humiliation of a tycoon and suspected master criminal, Chen Zhe. If you watch the footage, you see that the guards in the SWAT gear have changed him into the prison guard. and they're placing the black bag over his head. His arms are in shackles. David Ramley is a Bloomberg investing reporter based in Singapore. He watched the footage of Chen's extradition from Cambodia. A team armed with automatic weapons leads Chen onto the plane.

2:14And then it's later when he comes off the plane, they take the bag off and his eyes are just staring at the ground. And clearly he realizes this is a very different scenario to what he had expected. Chen allegedly ran a criminal network in Cambodia for more than a decade. His businesses were believed to have used forced labor and were said to have defrauded people all over the world of billions of dollars. A lot of countries had their eyes on him, including the U.S.'s Federal Bureau of Investigation. Different governments have different accusations regarding Chen and his organization. Most of it revolves around money laundering.

2:51Some of the accusations say what he was laundering were proceeds of crime, and a lot of that crime relates to a mix of online gambling, scam centers. Chen's arrest and extradition was a dramatic reversal of fortune. He had spent years living a billionaire's life in Singapore, London, Taipei, and Hong Kong. He cruised with politicians on his super yacht and was chauffeured around in luxury cars. So what changed that led to this abrupt and sudden downfall? I think it was a mix of various factors. On the one hand, you had rising pressure from the Americans. They clearly sanctioned a huge number and a huge array of his organization.

3:33Chinese authorities also had been ramping up pressure. And Cambodia basically had to act. All the things that Chen had used to maintain his support for so long within the Cambodian regime, all the things that had kept him operating now coalesced into unstoppable pressure.

3:55Welcome to the Big Take Asia from Bloomberg News. I'm Wan Ha. Every week, we take you inside some of the world's biggest and most powerful economies and the markets, tycoons and businesses that drive this ever-shifting region. Today in the show, the rise and fall of Chen Zhe, the tycoon who allegedly built an empire on scams, trafficking, and political protection. How his suspected criminal network, earning tens of millions of dollars a day, suddenly crumbled, and what led to a swift downfall.

4:35By any account, the rise of Chenzi was meteoric. Born in 1987 in Fujian, a southern coastal province of China. He got his start in business running an internet cafe and gaming center. When he started in Fujian, to the best of our knowledge, and according to his own family office's now-deleted biography, he was just another kid, worked with his father in the family business before eventually getting into internet cafes. And at a very young age, I think circa 24, he went off to Cambodia to seek a new fortune. In 2014, Chen appears to found a way to acquire Cambodian citizenship under a foreign investor program.

5:18Soon after, he founded Prince Real Estate. Well, at first, his empire in Cambodia was probably relatively modest. He was doing property development. He was doing certain buildings, business parks, etc. But quickly, he managed to flip these into much larger enterprises. There was a downturn around the early time that he was there. And a lot of Chinese entrepreneurs and investors actually left Cambodia because they found it a little bit too risky. He doubled down. And in doing so, he really established himself as a key player. Prince real estate quickly became a household name across Cambodia. As Chen's wealth grew, it expanded into a full-blown conglomerate.

5:57He started building casinos. He started building hotels, restaurants. He even got into a wide variety of services. By the end of his time, he had Prince Bank, which actually had about a billion dollars in deposits from various clients. And then at some point, he's alleged to ventured into a lot of illicit operations as well, right? So a lot of the accusations from both the NGOs as well as from researchers, journalists, the U.S. agencies such as the FBI, center on the dual-use aspect of his empire. And inside of those office buildings were his operations, allegedly, for running scams, targeting citizens all over the world out of billions and billions of dollars.

6:41That money would often be funneled into the purchase of crypto mining equipment. And then the crypto mining equipment was harvesting huge amounts of crypto, which was then ostensibly clean. And that's one of the key ways that he allegedly laundered money. During those years, Prince Group built business campuses and poured money into transforming a Cambodian port city called Sihanoukville into a gambling hotspot with numerous casinos and hotels. Investigators allege some of these sites became notorious scam hubs. One of them was a place called Mango Park. Once upon a time, it was a farm of mangoes, and then they turned it into a processing center for mangoes.

7:22And then they basically built over it a series of office buildings. There are many facilities filled with thousands of workers who are actively scamming people all over the world, according to various indictments and accusations. The allegations against Chen say workers from across the world worked in shifts around the clock in these complexes to scam overseas victims out of money. The scheme is known as pig butchering. That's a reference to fattening pigs before slaughter. These range the gamut from your average love interest scam where somebody claims to be a potential wife or a potential husband for someone who's perhaps a little bit lonely, to the classic Nigerian prince scam where someone claims that they have a huge fortune awaiting you if only you jump through a series of hoops.

8:08And in other cases, there are investment scams where they claim to be very successful investment brokers who take your money and can triple or quadruple your funds if you use their platform to do so. And in all of these cases, allegedly, it's simply a way of extracting money from people's bank accounts. And David, what was life like for these workers, many of whom, as you said, were likely trafficked? What kind of conditions were they living and working under? Well, it's not quite black and white. It's actually quite fascinating. Many of the workers really were paid. They were salaried employees who knew what they were doing, but many others were not.

8:45They had come under false pretenses. Some had thought they were working normal IT jobs. They were brought in. They were taken to the room. And if they performed well, they actually got paid. Sometimes they got bonuses. In other cases, if they did not perform well, if they constantly or even occasionally made mistakes, they were often punished. And the indictment details some of these alleged punishments, beatings being meted out, people being hunted down. And how lucrative, David, were these scam centers? Well, according to the indictment, one of the key lieutenants boasted in text messages that the operation was generating in excess of 30 U.S.

9:24million dollars per day. That's only in 2018. And obviously you can't build a business empire like Chen's of this scale without connections. How well connected politically was he in Cambodia? Chen was incredibly well connected to the highest levels of politics and power in Cambodia. There are a variety of ways to illustrate this, but I'll give you one. 2022, on a state visit to Cuba, Chen's right there in videos that you can look up right now on former Prime Minister Hun Sen's personal official verified Facebook page. Chen used his growing wealth to build political influence and style himself as a philanthropist.

10:07He donated trucks to Cambodia's national police, handed out scholarships, and gave about$2 million to the Cambodian Red Cross, which is overseen by Boon Rani, the wife of longtime leader Hun Sen. And when Chen got wind of then-Prime Minister Hun Sen's fondness for luxury watches, he leveraged that too and set up a specialty watchmaking school. Prince Horology was the watch school that he set up and produced the watches that Hun Sen handed out to world leaders during the ASEAN meeting. If you go to the government collections of the U.S. government, the Canadian government and the Australian government, you will find wristwatches with Prince Horology and his personal logo etched into the equipment there.

10:55By 2020, Chen had reached the absolute pinnacle of Cambodian society. And thanks to his high-powered political connections, Chen and his businesses were shielded. And they flourished for more than a decade. Well, according to people we've spoken to, it was definitely a fact that if you moved against Chen, it was seen as you moving against Cambodia. And you have to remember the geopolitics of the time. Everyone wanted Cambodia to be on its side in this new Cold War scenario, and none wanted to offend Hun Sen, Hun Manet, or the senior politicians of Cambodia. Protected, Chen allegedly built one of the biggest scam syndicates in the world.

11:38The combination of money from Prince's legitimate and illicit businesses made Chen extremely rich, and he moved money offshore and began spending it. He led the life of a global billionaire in cities all over the planet. He had properties in Hong Kong. He had properties in Tokyo. He had properties in Singapore, London, you name it. He had a 54-metre super yacht, and that was only one of several yachts that he owned or controlled. And on those yachts, he would host highly elaborate parties. We're not talking normal parties that you and I might attend. We're talking parties with free-flowing whiskey, aged for many, many decades, costing thousands of dollars per gram.

12:23Cuban cigars of every vintage you can imagine. I mean, the fact that there was so much money flowing from Prince Group, did that raise any alarm at any of the banks? Certainly. What I found fascinating was that several banks actually filed suspicious transaction reports against him. And they filed that with various regulators, not just in Singapore, but also in Taiwan. etc. The fact that they themselves found him triggering so many red flags that they shuttered his accounts shows that many banks knew something was up. But because there was no way for the banks to warn each other for quite fair privacy reasons, and because the state was not empowered in some ways to warn other banks when a separate bank had closed someone's accounts, he was simply able to spin up new bank accounts at other institutions and continue transferring money all over the world.

13:15Chen could not be reached for comment. A spokesperson for the Prince Companies, who asked to be unnamed for safety reasons, denied the allegations from the U.S. and U.K. against Chen, and said the U.S. Department of Justice's legal filings contained inconsistencies, falsehoods, and egregious overreach. After the break, how international pressure from across the globe triggered Chen's sudden downfall.

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17:03And in July 2020, the king bestowed that title on Chen Zhe. It was a remarkable achievement. But at the very point that Chen had reached these dizzying heights, events were in play to bring him down. Chen's alleged criminal enterprises benefited from the COVID-19 pandemic. People spent more time online, and the pool of potential scam victims widened. And according to experts, Chen and the Prince Group were just one part of a broader network of scam operations across Cambodia and the region. But as a number of victims, likely millions worldwide, from the U.S. to China, began to grow, so did scrutiny.

17:46Law enforcement agencies had already caught a scent of what Chen was up to. And in 2020, Chinese authorities set up a task force to investigate the Prince Group in Cambodia. But real international pressure didn't come until the end of last year. In October, the U.S. and U.K. governments finally decided to take action against him, and comprehensive action, I should say. They sanctioned over 100 different entities all over the world, and many of these were controlling entities used to run companies in other parts of the world. It was a real shock to the system, especially for the Asian law enforcement organizations.

18:24They actually had not been made aware that these sanctions were about to hit. So it was only after the sanctions were announced that governments in Hong Kong, Singapore, Taiwan and elsewhere started to take some serious action and seized assets ranging from cars to jewelry to gold and property. U.S. federal prosecutors also revealed that they had seized nearly 130 ,000 bitcoins Chen once controlled. That's a record haul then worth$15 billion. This week, lawyers for Chen filed a motion in a New York court to dismiss the U.S. government's seizure of a haul of Bitcoin it's linked to him. The lawyers argue that many of the allegations against Chen are provably and obviously false, and that accusations he oversaw scam compounds were nonspecific statements and background commentary about conditions in Cambodia.

19:19They raised questions about the timeline of the cryptocurrency seizure and said that Bitcoin couldn't possibly have been the proceeds of fraud or money laundering.

19:33Last year, tensions between Thailand and Cambodia escalated to deadly violence along the border. And in the lead up to Thailand's elections, scam centers around the region became a hot button issue in the campaigns. The Thai government had turned it into a war on the scams. They had actually actively bombarded scam centers on the border with Thailand. They were illustrating to the international public the extent of the scam activity targeting citizens around the world. At this point, Chen's operations had become too big and his victims too numerous to ignore. President Trump himself even got involved, forcing Cambodia to crack down on scam centers that target Americans.

20:19He explicitly made it a part of a deal for lower tariffs. This was just a series of unfortunate for him events that came together. It's hard for him to predict that the Americans would suddenly do such a thing. It's hard for him to predict that the Thais would use scam activities as a key tentpole for justifying their invasion of Cambodian alleged territory. And while the Americans were honing in on Chen and his suspected scam centers, China was also making progress on its investigation. For weeks, some of Chen's staff were expecting Cambodia to reach a deal with China that would result in just a slap on the wrist for Chen.

21:00But the end, when it came, was sudden. In a late-night statement on January 7th, Cambodia announced that Chen and two others had been arrested and immediately extradited. Since his arrest and extradition, what do we know of the operations of Prince Group now? with him out of the picture. Well, we understand that the operations of Prince Group are much depleted. Several organizations that were in full swing operation before he was arrested, such as Prince Bank, Prince Real Estate, Prince Horology, the watchmaking school, were all curtailed or shut down. Now, these kinds of scam centers, which are prevalent in parts of Asia, they often depend on trafficked workers.

21:46Cambodia shut down a number of these centers. What happens to these workers now? Well, what's happened since Chen's arrest has been remarkable. We've seen a lot of scam centers throughout Cambodia emptying out streams of people from all over the world, India, Indonesia, China, other parts, queuing out in front of their country's embassies, trying to get home, saying that they had escaped and wanting to get a ticket back to their place of birth. But what we've also heard is that a lot of centres are allegedly still in operation. They've simply quietened down. According to one of the senior ministers we've spoken to, scam activity is down 50 % in Cambodia.

22:27Now, we don't know exactly what that refers to. Is it the number of scammers in countries, the number of scam operations or the revenue lost? But it shows that even by the Cambodian government's own admission, there's still a substantial amount of scam activity happening today, right now. At the end of the day, David says scamming is just too lucrative for criminals to resist. And these scammer networks are like hydras. You cut off one head, but others are ready to emerge and replace them. I think the main thing standing in the way of shutting down all of these scam centers is greed. The huge amount of money that they are able to generate is liable to create corruption in any market, let alone emerging markets and frontier markets.

23:12Basically, the only way this gets shut down is if you have clean government willing to take drastic action against some of the most senior members of your own country, both in business, politics and perhaps other spheres of influence. And that's a hard task. I think one unanimous thing we've heard from every expert is that this is not the end of scams, either in Southeast Asia or the world. This industry will continue and there will continue to be victims. Now, how successful those efforts are in shutting down these centers, that remains to be seen. And coordinated action can make a real impact on that.

23:54This is The Big Take Asia from Bloomberg News. I'm Wan Ha. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you liked the episode, make sure to subscribe and review The Big Take Asia wherever you listen to podcasts. It really helps people find the show. Thanks for listening. See you next time.

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