A seriously ill 86-year-old man from Kensington has lost more than £48,000 to Canadian fraudsters.
They also duped a 70-year-old from Edgware Road, Paddington, into handing over £4,875 to enter the same phoney £500,000 prize draw. She now too frightened to answer the telephone.
The fraudsters have stolen more than £350,000 by tricking at least 22 elderly and vulnerable victims into laundering money and transferring it overseas.
Several lost their life savings and borrowed money to cover further demands, as they fell deeper into the ruse.
Westminster Council trading head Sue Jones said: "It's disgusting that these fraudsters deliberately target vulnerable people and not only take their life savings but use them in this sinister way to launder money."
Westminster's Trading Standards department slowly unravelled a web of victims after the woman contacted police in May 2008. It is now working with police in the UK and Canada to track down the perpetrators.
The Paddington victim, who is single and lives alone, was first telephoned in October 2007 by politely-spoken scammers. They told her she had won an international sweepstake, but needed to pay "refundable" taxes and insurance fees to claim the money.
She was persuaded to send four cheques to UK 'agents', who were in fact another set of victims. These 'money mules' were told to bank the cheques and transfer the sum to Canada, to help release their own winnings.
Ms Jones added: "This is the first time we've seen this scam in the UK but they are much more common in America and Canada. Unfortunately, it looks like we may see more, as fraudsters invent ever more sophisticated scams."
Investigators followed the trail of cheques from Edgware Road to another victim, a 68- year-old widow from West Sussex. She had innocently laundered a total of £21,000.
The OFT has advised anyone who is contacted about an alleged prize draw or lottery win and suspects it may be a scam to contact Consumer Direct on 08454 04 05 06 or www.consumerdirect.gov.uk .
