The nft scam targeting artists

(MUSIC INTRO) [00:00:02] Bob: This week on The Perfect Scam. [00:00:05] Douglas Newton: Over months, I kept this a secret, I kept thinking, this must be a scam but I would look it up on the

internet and I didn't get any definitive proof that it was. It was like a nightmare. It, it was a horrible experience, it really was. Kind of the worst thing that ever happened to me.

(MUSIC SEGUE) [00:00:27] Bob: Welcome back to The Perfect Scam. I'm your host, Bob Sullivan. (MUSIC SEGUE) [00:00:32] Bob: If you're an artist, there's a short phrase that you

always want to hear. "I'd like to buy your painting." It might be something you've waited your whole life to hear. Well today's guest has heard those words before.

He's had many gallery showings, but when a new kind of buyer reaches out to him, well it seems like the opportunity of a lifetime. I think you're all going to love meeting Douglas

Newton. Probably some of you dream of being just like him. Douglas has always been a painter, but when he retired from his first job, he turned his passion into a second career, and well I

have to say, I love his work, a lot of it centers on candy. [00:01:17] Bob: Okay, well I was supposed to be doing prep for this interview, but instead I found myself just losing all sorts of

time on your website. Your artwork is beautiful. [00:01:26] Douglas Newton: Oh, thank you very much. Thank you. [00:01:29] Bob: I am staring at your candy page right now, and I'm

fixated on, yeah, well I mean it's, it's first of all, it's such a whimsical, delightful subject to paint. How did you get started on candy? [00:01:40] Douglas Newton:

Somebody just suggested a candy kiss years ago, and I painted one, and it started from there. You know all those, all those reflections and whatnot in the foil. The candy itself is, is

really boring, but it's the wrappings that is interesting. [00:01:58] Bob: Yeah, so the way that you play with light is just amazing. [00:02:02] Douglas Newton: Well thank you. Thank

you. I don't use photographs. I just set it up and paint it. And uh... [00:02:10] Bob: And so, so you are painting what you're seeing in front of you. You have a... [00:02:12]

Douglas Newton: Exactly. Yeah, yeah, pretty much. I mean I might change a few things, but not much. I pretty much paint what I see. [00:02:22] Bob: Okay, so I'm just, because this is a

podcast and I have the awful challenge of trying to describe an artist's work in words, which I, which terrifies me in a moment like this, so I'm going to make you do it. I am

looking at um, maybe 5 or 6 pictures down on the candy page, a set of chocolate balls, I believe that are wrapped up in different color foil. [00:02:42] Douglas Newton: Yeah, that's

what they are. Yeah. [00:02:44] Bob: And what's amazing about it is each individual piece of candy has reflections on it from you know what I believe are the six pieces of candy around

it. Is, is that something that you do, right? [00:02:56] Douglas Newton: Right, yeah, they, they reflect color on each other and that's kind of, that's what makes it interesting.

[00:03:02] Bob: But also, I don't know, I'm looking at this, you, this, this drawing has 50 colors in it? [00:03:10] Douglas Newton: Oh you're looking at Many Chocolates, I

think. Yeah, that's uh... [00:03:13] Bob: Yes, yes, yeah. [00:03:14] Douglas Newton: Yeah, that was, I've never done as many as that, but uh, it was fun. And uh, it's still

for sale. Nobody, nobody's bought that one. I don't know if... [00:03:25] Bob: How much, that's a lot of paint mixing. [00:03:28] Douglas Newton: Oh it yes, yeah, yeah. Well

it's, that's what, that's, it's all oil paint and uh it stays wet for a day or two, so you could work back into it and uh, it's usually at least two coats, and uh,

it takes time. It does take time, and a lot of careful looking. And also, I use a magnifying glass on a stand, so that helps. [00:03:50] Bob: Wow. Okay, so I can see why people would buy

your paintings. [00:03:54] Douglas Newton: Well, I hope so. (chuckles) I sold six last year, so that was okay. And uh, this year not so much. I've, I don't know. All this crazy

stuff in, in economics right now is, I don't know, who knows. But I don't know. [00:04:13] Bob: Douglas, who is 86 now, had actually spent his entire career in advertising before

he retired, but painting was never far from his mind. [00:04:23] Douglas Newton: I, I painted, and I, I painted, but not all the time. And, uh, it was sort of a weekend, you know, a, a lot

of life drawing and, and yeah, I, but I really, it's a full-time job now. [00:04:38] Bob: Yeah, so it didn't come out of nowhere. You had spent decades working on the craft.

[00:04:42] Douglas Newton: Yeah, yeah. Yeah, I did, I, yeah, I did. I went to Art Center School out in Los Angeles many years ago. [00:04:49] Bob: Douglas' life went through a lot of

changes at retirement, that's right about when his art career started. He lives in Brooklyn now, but... [00:04:58] Bob: Yeah, how long have you been there? [00:05:01] Douglas Newton:

We've been here 19 years. [00:05:03] Bob: Where were you before that? [00:05:04] Douglas Newton: In SoHo in Manhattan. We had a loft in SoHo, and... [00:05:09] Bob: That's a pretty

big change. [00:05:11] Douglas Newton: Yeah, it was a big change. We, we bought a house with my daughter, son-in-law, and granddaughter. And it's been wonderful. They live upstairs,

and we've watched my grandma, granddaughter, Eva, grow up and she's... [00:05:25] Bob: That is such a gift, wow. [00:05:27] Douglas Newton: Yeah, it was, I didn't plan this.

It just worked out and uh, but it's been great. It's really wonderful. [00:05:34] Bob: It also sounds like a TV show. [00:05:36] Douglas Newton: (chuckles) Well we, we get along

really well and uh, we don't, we don't eat dinner together every night, but uh, once in a while. It's, you know, we lead separate lives, but they're right there.

[00:05:49] Bob: That's just great. Your move, tell me if I'm wrong, but I believe it sounds like your move pretty much coincided with your, with the beginnings of your art career,

is that right? [00:05:59] Douglas Newton: That's exactly right. I'd started painting full-time right after we moved. [00:06:04] Bob: Soon after you started doing this, somebody

offered you a small exhibition somewhere in Brooklyn, is that right? [00:06:10] Douglas Newton: Oh I've had a lot of exhibitions in, group exhibitions and online ex--, one-person

exhibitions. If you look on my page called Exhibitions, you'll see, you'll see them all. [00:06:23] Bob: Do you remember the first time that you sold one of these paintings and you

really thought like wow, now I'm a profession artist? [00:06:29] Douglas Newton: (chuckles) The first time. Oh I don't know. It must have been oh way back. I think I even sold a

few before I retired from work. Yeah, you know, you sell them to people who know you. But when you're on something like Saatchi or uh, First Dibs, or Art Finder, you uh, a lot of people

see your work and uh, it's good. [00:06:52] Bob: In fact, those online art exhibitions are really important for Douglas because, well, health issues make it pretty hard for him to show

at in-person galleries now. [00:07:03] Douglas Newton: I got West Nile Virus about 7 years ago, so I don't walk very well. [00:07:10] Bob: Oh wow. [00:07:11] Douglas Newton: So, West

Nile is, is a nasty thing. I was in the hospital for three months, and I... [00:07:17] Bob: Oh my God. [00:07:18] Douglas Newton: ...don't remember the first month. I just half, I think

I was talking to people, but half in a coma. And then finally I had PT at NYU Langone, and they got me to use a walker, and it, which I still have, but now I just use a cane or hiking poles

for long walks. And I try to take a walk every other day. [00:07:43] Bob: A careful walk is one thing, but getting out to a gallery is quite another. [00:07:50] Douglas Newton: Last time I

took a subway, I feel flat on my back, and so I quit that. Also people jostle you, and I'd just, they'd knock me over, yeah. [00:08:00] Bob: Yeah. So that makes online galleries

even more important to someone like yourself, right? [00:08:04] Douglas Newton: Yeah, yeah, it really is. It's, it's about the, I, I mean I would happily who in a, in a New York

gallery, but I'm in a Brooklyn gallery now called Tabla Rasa, and uh, they've, they gave me a one-person show, and they've been great, but it's not like a gallery in the

city. [00:08:23] Bob: Of course. But what, what is hanging in that, in that show? [00:08:27] Douglas Newton: Oh, the, the Tabla Rasa gallery? The show was called, what was it called? Hard

Co--, Hard Candy, and it was all candy paintings. (chuckles) I, I hate to do them over and over, but uh, they do seem to sell out. Right now I'm working on a, on a food still-life with

some eggplant and a wine bottle, so that's a little different. [00:08:48] Bob: That's for the adults. The candy's for the kids. [00:08:50] Douglas Newton: Yeah. Yeah, I, I

like, I like to vary it, you know. [00:08:54] Bob: Sure. Sure. So you started doing online showing, online galleries fairly, fairly early on I would say maybe? [00:09:03] Douglas Newton:

Yeah, I did. I started with Saatchi I think in 2009 or something like that. I've been with them a long time. [00:09:10] Bob: And somewhere along the line you heard of NFTs, or did, did

you not hear about them until you were approached by someone? [00:09:18] Douglas Newton: I was approached. I, I knew, I knew vaguely what they were, and uh other people had offered to buy

them, and you know you had to, the artist has to convert them to an NFT, and it cost a few hundred dollars. I just hesitated to do it. [00:09:36] Bob: NFTs. Non-Fungible-Tokens. What are

they? Well the simple explanation is an NFT is a digital piece of artwork which has some special mathematics attached to it to ensure it's one of a kind. So in theory some people

believe ownership of an NFT is valuable, not unlike owning a real physical piece of art. NFTs are a lot like cryptocurrency; their authenticity is proven by a blockchain entry. There's

more to NFTs though. An NFT doesn't have to be art; it could be anything. And like crypto, NFTs are very risky investments. Even more risky than cryptocurrency perhaps, and NFT creation

can a bit confusing. Douglas wanted nothing to do with making NFTs out of his art until... [00:10:27] Douglas Newton: And I just wasn't crazy about the idea, but I was approached on

LinkedIn by a woman. Her name was Ernestine Vigil. She lived in Albuquerque, New Mexico. She said she liked my work, you know, and she would like to convert one of them to an NFT and sell

them. [00:10:48] Bob: So Douglas trades LinkedIn messages with Ernestine for a while. [00:10:53] Douglas Newton: Well, I was intrigued because she said, you know, I can sell this, this thing

and she picked a, a work out of my website. It was actually a pastel drawing of just two people I'd done in, in a life drawing class, and she said she can sell it. [00:11:12] Bob: And

critically, she was absorbing the expense of making the NFT, a few hundred dollars, and do all the legwork. So what's the risk? Douglas gives her permission. [00:11:24] Douglas Newton:

They sent me a contract actually, a paper contract that I filled out and mailed back. She didn't flatter me too much, it was more like, this, we just have to do this, and we just have

to do that, and then you're going to get a lot of money, and it kept going up. [00:11:41] Bob: So he fills in the paperwork, sets up a crypto account as she told him to do. About two

months go by and then Douglas hears from her again with amazing news. [00:11:53] Douglas Newton: I thought, you know I'd be, I'd be happy to sell it for $1000, the actual thing, or

less even. It's just a drawing, and a pastel drawing, and uh, she said I, she could sell it for $49,000, and then she told me it had sold for $49,000. [00:12:13] Bob: She sold the NFT

for $49,000?! That's amazing. [00:12:19] Douglas Newton: It was like free money because I, I hadn't expected to even sell the thing, you know. I thought, oh I'm going to

surprise my family with all this money that's suddenly appeared. And I kept it a secret from the beginning. [00:12:33] Bob: Well you, you probably were imagining, you know, what, you

could pay for college for the kid or, or... [00:12:38] Douglas Newton: Yeah! Oh yeah, yeah, I would do re--, repairs on the house. Not that it needs that much, but you know, just lots of

extra money. It was wonderful. [00:12:49] Bob: But then, after a couple more months pass, the news gets even more wonderful. The NFT has been sold again, resold actually for even more money,

so now he's entitled to eventually more than $300,000. [00:13:05] Douglas Newton: I said, "Great, where's the money?" And then she said, "Oh, by the... it sold,

it's resold for much more, but you have to pay the sales tax and the, what they call internet fees." They call them "gas" in the trade, internet fees. And so she started

asking me for money. [00:13:28] Bob: The requests are small at first, just a thousand dollars for sales tax and internet fees. Douglas sends that to her using his new cryptocurrency account.

Then she needs several thousand more. And as the days go by, the requests and fees keep going up. Douglas doesn't have that kind of cash lying around. [00:13:48] Douglas Newton: I

ended up getting a, a personal loan at Citibank for $4000, and I ended up maxing out a couple of credit cards. [00:13:57] Bob: He would send the money to this agent using PayPal, but that

had limitations. Ernestine asked him to send money almost daily for several weeks until... [00:14:09] Douglas Newton: I can't remember the exact figures, but it was like $2000 a day

they would let me do. And somehow, I worked my way through $100,000. [00:14:19] Bob: Just to give me a, an example, at one point she calls and says, "Great news. Now it's been sold

for $150,000, but you need to put up $20,000." Or you tell me, what, what kind of numbers would... [00:14:30] Douglas Newton: That's exactly how it went. It was uh, we were

conversing on LinkedIn back and forth. I never talked to her on the phone. It was all on LinkedIn and later on we switched to email for some unknown reason. [00:14:47] Bob: Douglas has maxed

out his credit card so he turns to the only other source of funds he has in his quest to get this NFT windfall released. [00:14:57] Douglas Newton: And I was just selling all this, all

these IRAs getting them into Citibank, getting the money into Citibank, and then converting them. [00:15:06] Bob: What was the largest single dollar amount she asked for? Do you remember?

[00:15:11] Douglas Newton: Oh, it must be about 20 or something like that. [00:15:16] Bob: But all the while, he thinks he has a huge payout coming. In fact, his cryptocurrency website shows

just that. [00:15:23] Douglas Newton: By the time it was over, she said I was going to get $310,000. [00:15:30] Bob: You could look at an account and it looked like you had $300,000 worth

of bitcoin there, right? [00:15:36] Douglas Newton: Yeah, oh yeah. Yeah, yeah, exactly. 310. I had to pay another $10,000 to get the key to unlock the money. That was the last thing they

wanted me to do. Some, some sort of a key that would unlock the money. [00:15:53] Bob: And all this is so tantalizing, right? Because they kept saying just pay this little bit more and you

can unlock all this money. [00:15:59] Douglas Newton: Yeah. I hate to admit it, but I sent all my IRAs at Vanguard to them. [00:16:06] Bob: While all this is going on, Douglas doesn't

tell his family. The whole time he's hoping he can surprise them with this windfall. But after that last request, haunting doubts creep into his mind. [00:16:19] Douglas Newton: Over

months, I kept this a secret, I kept thinking, this must be a scam but I would look it up on the internet and I didn't get any definitive proof that it was. It was like a nightmare. It,

it was a horrible experience, it really was. Kind of the worst thing that ever happened to me. [00:16:36] Bob: Oh God, I'm so sorry. [00:16:39] Douglas Newton: Yeah, and I just, and I

kept it a secret and I really thought I would surprise my family with $310,000, until they asked me for more money than I had in my IRAs at Vanguard, and at that point I just, something

dawned on me, and I just realized that you know I, I didn't have any more money to give them, and it was that I was being scammed. I really realized, it took that for me to realize that

I was being scammed. [00:17:10] Bob: The feeling is devastating. [00:17:15] Douglas Newton: Just the fact that I would spend all this money and nothing, nothing real ever happened, just

promises. I remember waking up late at night thinking about this and going on the computer and googling everything I could think of. I never found anything definite, you know, like some

other person who'd been scammed by them. I couldn't find it. But I had a lot of doubts and gradually the doubts got bigger than the hope, and uh when they asked for that last, last

$10,000, which I did not have, then I, I confessed everything to my wife and my kids and uh, that, that was a really bad day. [00:17:56] Bob: A really, really bad day. [00:18:00] Bob: Can

we talk about the day you had to tell your, your family? What was that like? [00:18:03] Douglas Newton: Oh, it was horrible. It was just horrible. And they couldn't believe it at first,

and then I, you know I, I showed them the numbers. [00:18:12] Bob: Douglas' son ends up traveling home to help his dad deal with the fallout. [00:18:18] Douglas Newton: My son lives in

Vermont, and he came down and together we tried to do something. So we, we went to the police. We went to the Brooklyn DA, who were all very helpful, but they said this money's gone.

You're not going to get it back. And they, they traced some of the calls, the emails I sent and they thought the money went to Europe, and then eventually Nigeria, imagine. Well I could

imagine. But to Germany and other countries that it was part of a whole gang of people. She was just the representative, I'm sure working on a percentage. [00:18:58] Bob: The Brooklyn

DA is Eric Gonzalez, and he's taken a particular interest in NFT and crypto scams. There's even a task force -- we'll get to that -- but he tries to help Douglas as best he

can. [00:19:11] DA Eric Gonzalez: I think in this particular case that we're, we're talking about an 85-year-old victim had really invested his life savings in trying to recoup

money, monies that he thought he had earned by selling his NFTs online. W met him when he came into the office. [00:19:32] Bob: And it's a good thing he did report it because when the

Brooklyn DA investigates, he finds out other artists have also been victims of these same criminals. [00:19:41] DA Eric Gonzalez: I think that you know traditionally he was somewhat

embarrassed to report it, and it just shows you how dedicated these uh bad actors are into finding you, right, because what they, what they realized was that there are artists all over

America. By the way, during the investigation of his case, we learned of at least two other artists who were similarly scammed. And so they were reaching out to artists who were trying to

sell their art online. They used a, a website, you know they spoofed a real site where people actually do buy NFTs from. They spoofed that site, they changed it a little bit, they reached

out. It looked like a real legitimate NFT marketplace so where an artist should be able to you know legally and lawfully and safely sell their art, and they targeted him, right? He was

directly targeted by this, it wasn't like he was looking for something too good to be true, initially. They found him. They said, "Hey, we'd love sell your art." They

even had him sign a bogus contract that seemed legitimate like a contract for sales of his art. They kept telling him when his art sold. And then they started to do what they typically do

which is now in order to retrieve your money, I think they had said he had sold about $300,000 of art. Well you have to pay the taxes on it. You have to pay fees to us. And he didn't

have that money and so he went into debt to get that money. He, he maxed out credit cards. He, he did other things to uh, to get the money to pay his taxes and his fees. And by the time he

had invested over $100,000 in fees and taxes, he realized he was never going to get this money and fortunately he reported it. We were able to stop this particular group of bad actors from

targeting other artists. [00:21:26] Bob: The prosecutor's office has had a steady stream of visitors, victims with heartbreaking stories. [00:21:33] DA Eric Gonzalez: We're seeing

one sad story after another sad story. I've had people who mortgaged their homes, maxed out their credit cards, have lost their entire life savings. And so while it sometimes seems like

you're fighting an uphill battle, every time you meet one of those people, you hear their stories, you realize that the effort is worth it because a lot of damage is being done. And

unfortunately for most of the victims, we're never going to get them their money back. Their monies go overseas, tracked, I think in this particular case that we're talking about,

the NFT scam, that money went to Nigeria. It was converted into local currency there. You could see all of the operations and all the transfers of money, but it wound up in a country. And a

lot of these bad actors who are committing these frauds are actually living overseas, so even the thought of arresting them and prosecuting them, you know, is unlikely. You know every now

and then, you know, the government's able to capture the money before it leaves a marketplace and freeze it and return it back to the rightful owner, but that's very rare and uh,

you know, much of what this reporting these crimes really is about is preventing further victimization. [00:22:44] Bob: And so by him coming forward, he at least helped other people avoid

being victims, right? [00:22:49] DA Eric Gonzalez: Yes. 100%, but also it starts to raise the awareness, right, like it starts to raise the awareness about how sophisticated these scams are.

He has nothing to be shameful about. You know he was a man trying to sell his art, beautiful artwork. Quite honestly, you know, without regulation, this is what happens, and this is why we

need district attorney’s offices and the federal government and others to be involved in regulating sort of this marketplace, because it's not easily regulated, right. There's no

brick-and-mortar stores that you could send it, someone in to, to investigate. You have to do this all on the online sites. And there's so many of them. There's a real

double-standard sometimes for people who get sort of caught in the web of a scam, and they lose their money and they're sort of made to be ashamed. We don't have that same level of

shame for someone who's, let's say for example, a victim of a mugging. But really, it's, it's a complex mugging. You know they, they reach out, they create a connection,

and often when you're making these investments, they seem like they're real investments, they're real websites, they often mimic other websites that you may be familiar with,

so they may change a couple of letters on the domain name, and all of a sudden you're really investing in something that is just make-believe. And that's what happened here in

this particular case. [00:24:13] Bob: Douglas ultimate sent all his retirement savings to the criminals. He's slowly recovering financially, but it's a long road. [00:24:24] Bob:

And how are you now? [00:24:25] Douglas Newton: Yeah, I, I've paid everything off I have to pay off. And uh, but the IRAs are just gone, you know I, that's money I saved up for

years buying IRAs and they went up in value. They were, they were great, and Vanguard's been, but Vanguard, you know I talked to Vanguard about it and they said un--, unless they broke

into your Vanguard account and stole money, we can't help you. And uh, and, and we talked to Citibank, and we talked to Chase so the credit cards were Chase and but they were all

sympathetic, but none of them would help me. Even with the credit cards. [00:24:58] Bob: Man. I'm just sitting here thinking about how much NFTs have impacted artists like yourself. Can

you talk about that a little bit? I mean it must be confusing. [00:25:06] Douglas Newton: It is confusing, and I, I'm told that a lot of them are not worth at all. It never made any

sense that an NFT could be worth more than the artist itself. And, and I used to ask people, why don't you just buy the painting and make your own NFTs? But it turns out the artist has

to make the initial NFT and then sell it to somebody who then hopes to resell it. But the, the prices offered are like 5 times what the painting is worth. You know I; I sell my paintings for

the most is around 2500, maybe 3000 for the really big ones. But most of them are like around $2000 and you know the gallery takes a half or 40% in the case of an online gallery. So I

don't, I'm not ma--, I'm not getting rich on this. It's uh, but the NFT thing is like they offer you all of this money, like five, $10,000 for, for a painting. And I

don't, I don't, I still don't really understand how it all works. [00:26:13] Bob: You and everyone else. [00:26:15] Douglas Newton: Yeah. And I, I don't know. I just

don't want any, anything more to do with it. I never want to hear about bitcoin and ETH again. I'm through with it. [00:26:25] Bob: Has all this impacted your art in any way?

[00:26:27] Douglas Newton: No, not at all. Not at all. It just, in fact I just try to work and not think about it. And I, I just, I, I feel so stupid basically or vulnerable. And ...

[00:26:40] Bob: Could we please, could we parse those words out because they're very different words, and I think it's a, the distinction is really important. Everyone in your

position has these deprecating feelings. [00:26:49] Douglas Newton: Yeah, I'm sure they did, I'm sure they did. [00:26:51] Bob: But you were vulnerable. That's very different

from being stupid. [00:26:54] Douglas Newton: Yeah. [00:26:55] Bob: I'm glad that you have the ability to do your work and, and ignore all this. I'm not sure that I could do that.

[00:27:01] Douglas Newton: Well I just, I mean it's what I do, and I enjoy it. And my problem is just finding the time to do it with, between household chores and, and uh, also because

of the scam I had to change everything. My kids insisted I change my email, my phone number, my bank account because they, they thought it was all, could have been penetrated. And uh...

[00:27:26] Bob: Sure. Yeah. [00:27:27] Douglas Newton: And, and that took a lot of time. I'm still convincing people to use my new email, and uh it's, worth it, and, and the

trouble was, I just certainly deserved the trouble that I have to go through with it. [00:27:40] Bob: The experience has taught him to ignore a lot of emails and other connection requests

that he receives. [00:27:46] Douglas Newton: I get people, somehow, they, even with a new email, I get things that say, we've taken $4000 out of your PayPal account. Well, and, and call

us. Call us. And I don't want to; I don't want to call anybody. I just go to PayPal and, and see that everything's okay. There are a lot of scammers out there, there really

are. [00:28:09] Bob: I heard you even had somebody reach out and say, "We, we heard you were a victim of a scam. We can recover the money." [00:28:13] Douglas Newton: Oh yeah,

yeah. Oh, there you go. There you go. [00:28:18] Bob: Those requests are fake, of course. [00:28:21] Bob: It's the most important thing about all these stories is, we want to share

these so people hear them and hopefully don't go through this themselves, right? [00:28:28] Douglas Newton: Oh I hope so. That's why, what's why I'm doing this, this

spot, you know. [00:28:32] Bob: Yeah, yeah, that's, that's the goal, and so, you know, you beating yourself up isn't going to teach anybody anything, right? [00:28:38] Douglas

Newton: No. I, I know, I know. I'm just, it's, these people are out there and they, you know I, I, I still get weird emails from people, you know. They want to buy a painting, but

they uh, you know they want to buy an NFT or something. I just ignore them. I just say no. [00:28:56] Bob: But you know I just want people to hopefully experience through your words what

it's like when someone is so good at, at being tantalizing, you know, it's just like, right? [00:29:04] Douglas Newton: Yeah, yeah, well I'm on Instagram and Facebook just for

the exposure. But that's where you get these strange requests, you know. [00:29:16] Bob: What is it that you want people to hear from you and to learn from your experience? [00:29:20]

Douglas Newton: Just be super careful, and be very cynical about people, and don't believe everything you hear. That's all I can say. I, if I'd just been more aware of, of

what I was doing, I never would have done it. I would have stopped at the beginning. The first time they asked for money I would have stopped. I'd say, "Keep your $49,000, and uh,

goodbye," you know. [00:29:44] Bob: I think that's the best advice, you know, keep your $49,000 I, I don't, you don't need to pay money to make, to make money is the

truth. [00:29:51] Douglas Newton: No, you, you shouldn't. You shouldn't. [00:29:54] Bob: There's one more important point Douglas has to make. It's not as if he

hadn't heard of scam before, but this one seemed tailormade for him. We talk about this a lot on The Perfect Scam. [00:30:06] Douglas Newton: I know there's a lot of romance scams

and investment scams, and this is my scam, and because I was an artist, I was approached by somebody you know, you think with art it must be more legitimate, but it, it wasn't. Yeah.

[00:30:24] Bob: There's just something so mean-spirited about this particular scam targeting artists who often struggle to earn enough just to keep making art. And who, of course, do

indeed hope every day someone will reach out to hire them or buy some of their art. [00:30:39] DA Eric Gonzalez: Yeah, I mean because he, you know, you should be able to sell your art,

right? I mean, I think what that sentiment is, first of all, he's 85 years old, but you should be able to sell your art with be--, without being victimized, and um, he didn't do

anything wrong. He, he just literally trusted that the people he was dealing with had his best interest at heart. They were both going to make some money. He was going to make money selling

his art, they were going to make some fees and commissions off selling his art. [00:31:09] Bob: And you know, when you're an artist getting a, a call like that about one of your

paintings, that's a dream come true. You know everyone hopes something like that happens so they're really preying on that. [00:31:17] DA Eric Gonzalez: Yeah. These are all

terrible stories. [00:31:20] Bob: As I mentioned, NFTs are a bit like cryptocurrency. And scams involving crypto and NFTs have become such a big deal, particularly in Brooklyn, that the

Brooklyn DA recently set up a task force called, The Virtual Currency Unit. [00:31:36] DA Eric Gonzalez: It really kind of was an outgrowth of many, many cases that people would get involved

in cryptocurrency investments or other kind of scams where they were giving money and thinking that they were getting rich on, on crypto investments and they were just really scammed.

[00:31:57] Bob: When the task force hears from victims, they try to recover stolen money which can be done sometimes, but... [00:32:06] Bob: and it's a race against time when you find

these active crime scenes, right? [00:32:09] DA Eric Gonzalez: Yeah, and I remember the head of the unit would say sometimes she has 30 seconds to try to freeze the transaction before it

transfers from one website. You know we look at these fraudulent cases and what you'll see is when it hits a marketplace, they'll buy one currency, it'll go immediately to

another marketplace and they'll buy a separate coin. So they'll change the currency around a bunch of times and then eventually it will wind up in the marketplace and cashed out in

some foreign country. [00:32:37] Bob: But 30 seconds, I mean I'm get--, I'm getting nervous just listening to you describe this. That must be pretty intense work. [00:32:42] DA

Eric Gonzalez: Right. So the trick there is we have very sophisticated software on our end, very expensive software that if we learn of it in an instance you know at that moment and

we're following that currency, if it hits an American marketplace which it often does, at that moment we can freeze it at that marketplace using this, you know, high end software, but

it really requires someone sitting there and following that, those transactions. And typically by the time someone realizes they've been scammed and they report it to law enforcement or

they come to the Brooklyn DA's office, you know that money has already transferred uh hands and is out of the jurisdiction. Um, so it, it's difficult. [00:33:21] Bob: Brooklyn

seems to be targeted by crypto thieves. Why? [00:33:27] DA Eric Gonzalez: We started to see it among different, you know, groups in our, in our community, Brooklyn is really, you know, one

neighborhood after another neighborhood of different communities and so we started to see it in the Russian American community, the Chinese American community. We started to see it with some

of our younger people in around romance uh scams and, and in this case, it was the, you know, a clear target of going after artists in the NFT space trying to do it. But what I learned

quickly speaking to people involved in this work was that cryptocurrency fraud was becoming a bigger and bigger issue and uh, typically the NYPD did not know how to respond to that so we

started to open a unit here so we could get directly engaged in this ongoing and growing problem. [00:34:13] Bob: And some of these numbers that I've read suggest that Brooklyn is a

particular target, not that other places aren't a target, but Brooklyn is hit pretty heavily by this. [00:34:21] DA Eric Gonzalez: Yeah, in 2023, we definitely were at 60% of the crimes

at NYPD did track 60% of the entire 5 boroughs, the uh victims lived in Brooklyn. So it seems like we were targeted. I think it is because we have so many different uh ethic uh, enclaves

and then in lot of those areas is a lot less trust of law enforcement, and you know, if you're able to speak that language, there's a, a big advantage in trying to get in and start

to do these scams. [00:34:53] Bob: And there's a, an affinity portion as well, right? I'm Russian, you're Russian, let's make money together, right? [00:34:57] DA Eric

Gonzalez: Yes, that's what we're seeing, and uh, it, it's a problem. [00:35:01] Bob: And one of the first things that this unit did was shut down a whole bunch of websites

that specifically started Russians, uh, targeted Russians, right? [00:35:08] DA Eric Gonzalez: Yeah, so the way a lot of these scams operate, they get you, at some point they communicate

with you through social media or on your cellphone or online, and they direct you to a website. And the website, you know, looks really real. Often there's places where you can scan

your phone on the website and then actually download an application onto your phone. It really has all the workings of you know legitimate business but the whole thing is a hoax and

it's really designed to separate you from your money. I tell people this all the time because these are professional scammers that are operating there. And so they put up a lot of time

and effort into getting money. I started to see the use of AI to engage people online and once they kind of hook someone into a conversation, they'll switch from the A--, the AI

generated conversation to a person who's then taking over the conversation. And, and it works pretty quickly. They, they gain your trust in a very short period of time. They start

asking you to invest with them. [00:36:13] Bob: So you spotted a bunch of domains that were doing this and just called up the, the domain providers, have them shut down. Is that how it

worked? [00:36:21] DA Eric Gonzalez: A little more complicated. The in and out of it is that we had to seek court orders to, to be able to seize the uh website or, or the domains that were

being hosted and so we were able to do that uh fairly quickly. And if you look at these websites, about 300 of them were seized, you'll see that it says now, "This is no longer an

authentic website. It's been seized by the Kings County District Attorney's Office. Please call us if you've, you know, have any further questions." And what we've

seen in that short turnabout where we've, we've covered those websites and prevented other people from being victimized, that we started to get phone calls and people are telling

us, "Hey, I was just about to make another you know contribution. What's that mean for my money that I've already invested" or someone says, "Oh, I was about to make

an investment and now I see that this is a, was this a scam." And so we're starting to see you know a lot of fruits of that. [00:37:18] Bob: The victim stories he sees are

powerful and very tragic. [00:37:23] DA Eric Gonzalez: We had a woman lost all of her money um, and she lived in Pennsylvania. And she, you know, she was looking for help. She had lived in

Brooklyn at some point and so she had heard that Brooklyn had a Virtual Currency Unit, although when she was scammed, she was, at the time, living in Pennsylvania. She, you know, older

woman, senior citizen. She drove her car all the way here, slept in front of the office so that, you know, she can be the first one in the morning to speak to the Virtual Currency Unit. And

you know of course we helped her to the best of our ability, but she was another person by the time she realized that she was being scammed, the money had been lost. And you know these are

heartbreaking stories because you know in a lot of cases um, this is not someone who's being greedy, this is someone who's investing you know, I've seen people invest their

pensions, you know, put second mortgages on their homes, max out their credit cards for the promise that, you know, they can, you know, survive. [00:38:24] Bob: Lately he's seen many

cases where two current scams are being combined with devastating results. [00:38:31] DA Eric Gonzalez: And one of the places where we're seeing a tremendous increase in these virtual

currency scams is in the dating context, on dating sites. On dating sites, someone is looking for a romantic partner. They meet someone who befriends them. Makes believe maybe they're

interested in learning more about them. They quickly turn those conversations about, hey, you know, I'm investing in crypto. I'm making some money. And in, in that sort of romantic

context they get the person to trust them and they start investing money and before they know it, uh it's all gone. Quite frankly, the, the internet is sort of like the Wild West

unless someone is regulating and you know trying to pay attention to these fraudulent websites; there's no way to stop them until this unit is playing an important role in trying to

like pull down these websites before they're able to victimize people. [00:39:20] Bob: Sometimes if feels like you're trying to shovel sand out of a desert bowl, right? [00:39:23]

DA Eric Gonzalez: Yeah, it, it's difficult work. [00:39:26] Bob: The District Attorney things financial institutions could do a better job of protecting consumers. [00:39:32] DA Eric

Gonzalez: I mean, there's just a lot more that we, we have to do. I mean you know and it's a lot of our cryptocurrency scams you're seeing seniors who've never done a

wire transfer ever in their life walk into a bank and say, "I need you to transfer $50,000 on a wire." Some 80-year-old person walks into the bank and says, "Please wire this

money," and the teller and others probably suspect something is off, but you know they're not trained in how to have those conversations. They don't want to overstep and make

sure that the person is okay. I think banks have to do more to make sure that, you know, we're protecting people from being scammed. [00:40:12] Bob: But there are a lot of things

consumers can do too. [00:40:15] DA Eric Gonzalez: Like if you're going to deal with someone online, you know you have to verify the authenticity of the website or the person that

you're dealing with, right? So you want to look at what the website is. If it's supposedly a name marketplace, something that's legitimate that you heard of before, you know

you should log on independently and not use the link that was provided. Make sure it's the same exact website. If there's a phone number and you're dealing with a particular

person, ask if that person's an employee of that company, because often when they're phishing these websites, they, you know, you're talking to a person, they don't work

there and if you just call the actual marketplace or you sent them an email, they say, no, that person doesn't work here, and you know you have to be cautious and, you know, curious

when people contact you directly. You know you can imagine if every company, legitimate company out there which would contact you directly on a 1-on-1 solicitation, that doesn't seem

like how people, how business can actually operate. And so when you're contacted directly from a company like this, you should be suspicious. If it sounds too good to be true, it's

probably not true. And then finally on a lot of these sites when they're really greedy, they ask you to share, you know, crypto wallet information. Obviously, you never want to do

that. But people have to understand what they're sharing, uh because when you share, you know your crypto wallet, they can wipe you out. They can take everything. And not just that or

the seed phrase, you know, people want that password, you never should be giving them that password. So there's so many things that people can do to make sure they're protecting

themselves, but some of the easiest things to do is just ask a friend or someone else in the business like, have you ever heard of this company? Has anyone in the artists' world ever

used this brand before? Let's just, you know, verify exactly who we're dealing with and, you know, try to only use the established sites. [00:42:12] Bob: And if you have given

money to someone you suspect is a criminal, reach out to law enforcement immediately. [00:42:19] DA Eric Gonzalez: Um, but once you think that maybe you've gone down the wrong road and

you've given some money, don't keep investing good money after bad money. Reach out to the authorities, reach out to NYPD. If you're in Brooklyn, reach out to my office, uh

because if they still think they're in the middle of scamming you, that's when we can be most effective. Sometimes we can actually catch a runner who may come to your house to pick

up money, or when they tell you to drop off money at a certain place, they'll often be there, you know, that's when we do get some luck and actually catch--, catch some of the

culprits in the act of the fraud. [00:42:57] Bob: Critically, if you are a victim, don't let shame stop you from coming forward. [00:43:03] DA Eric Gonzalez: Please, you know, to anyone

who is paying attention to this, I need folks not to be embarrassed or ashamed to report it. The only way we're going to prevent this from continuing to happen is to continue to target

these uh, fraudulent bad actors. And we're going to continue to step in. In fact, you know, I've just authorized to expand the unit somewhat, as there's somewhat retrenchment

in the federal authorities from doing crypto enforcement. I realize that I'm going to have to do more, and so we're going to be able to help more people and you know, please, if

you know of these cases, please uh call the Brooklyn DA's office and you'll be helped. (MUSIC SEGUE) [00:43:43] Bob: For The Perfect Scam, I'm Bob Sullivan. (MUSIC SEGUE)

[00:43:51] Bob: If you have been targeted by a scam or fraud, you are not alone. Call the AARP Fraud Watch Network Helpline at 877-908-3360. Their trained fraud specialists can provide you

with free support and guidance on what to do next. Our email address at The Perfect Scam is: [email protected], and we want to hear from you. If you've been the victim of a

scam or you know someone who has, and you'd like us to tell their story, write to us. That address again is: [email protected]. Thank you to our team of scambusters;

Associate Producer, Annalea Embree; Researcher, Becky Dodson; Executive Producer, Julie Getz; and our Audio Engineer and Sound Designer, Julio Gonzalez. Be sure to find us on Apple Podcasts,

Spotify, or wherever you listen to podcasts. For AARP's The Perfect Scam, I'm Bob Sullivan. (MUSIC OUTRO) _END OF TRANSCRIPT_