TL;DR: Money Talks News (reprinting USA TODAY) reported on September 21, 2026 that Lori Flowers, 58, of North Carolina, lost $600,000 after a LinkedIn contact posing as a man from Brussels asked for investment capital. Because she drained her 401(k), the IRS treated it as income and she owes $225,000, leading her to file Chapter 13 bankruptcy. A relief bill passed the House on September 15.
What happened
Money Talks News, reprinting USA TODAY, says that in 2022 someone contacted Lori Flowers, 58, of North Carolina, on LinkedIn posing as a man from Brussels who was moving to her area. They moved to email, then phone. About four months in, he claimed he had won a large US business contract, then said investors had dropped out and he needed capital.
The money
- She wired $400,000 from her bank.
- She took out two personal loans to cover a $200,000 shortfall he claimed.
- She withdrew money from her 401(k) to send to the scammer.
- In total she lost $600,000 and realised it was a scam around June.
Then came the tax bill
The IRS treated her retirement withdrawal as income. She owed $225,000 in taxes and penalties and filed for Chapter 13 bankruptcy. Her new monthly payment is $5,690, mostly for the tax debt, on top of personal loan payments of $4,000 a month before that.
The Tax Relief for Fraud Victims Act passed the House on September 15, 2026 and awaits Senate action. If enacted, it would likely remove the tax debt, leaving her responsible only for the $600,000 she sent. It would restore a theft-loss tax deduction that Congress removed in 2017 and again in 2025. The article also cites AARP figures that Americans aged 60 and over lost $7.7 billion to fraud in 2025. See our elder fraud statistics and tax fraud statistics for more numbers.
What to know before you move retirement money
- A 401(k) or IRA withdrawal is usually taxed as income, even if the money is lost to a scam.
- Never withdraw retirement funds to send to someone you have only met online.
- Talk to a tax professional before moving large sums, and to a trusted family member.
- Stop when anyone asks you to “fund a contract”, “release a payment” or “invest” as a couple.
Learn how pig butchering works, and what to do next with romance scam recovery steps and wire scam recovery. This is general information and not tax or legal advice. Run our free digital footprint check to see what scammers can find about you.
Frequently Asked Questions
How much did Lori Flowers lose?
$600,000: a $400,000 bank wire plus money covering a claimed $200,000 shortfall, partly from two personal loans and her 401(k).
How much tax does she owe?
$225,000 in taxes and penalties because the IRS treated her 401(k) withdrawal as income.
What is the Tax Relief for Fraud Victims Act?
A bill that passed the House on September 15, 2026 and awaits Senate action. It would restore a theft-loss tax deduction for scam victims.
Should I tax-plan before sending retirement money?
Do not send retirement money to someone you met online. If a loss has happened, speak to a tax professional.
Sources
- Money Talks News: She lost $600,000 in a pig-butchering scam. Then came the tax bill (Sep 21, 2026)
- FBI Internet Crime Complaint Center (IC3)
- FTC ReportFraud