Hacker Online Brokerage Intrusion Scheme Busted

Discussion in 'Wall St. News' started by Options12, Apr 17, 2012.

  1. Options12

    Options12 Guest

    According to the Complaint unsealed today in Newark federal court:

    Beginning in late 2010, Murmylyuk worked with others to steal from online trading accounts at Scottrade, E*Trade, Fidelity, Schwab and other brokerage firms. Members of the ring first gained unauthorized access to the online accounts and changed the phone numbers and email addresses on file to prevent notice of unauthorized trading from going to the victims.

    Once the hackers controlled the accounts, they used stolen identities to open additional accounts at other brokerage houses. They then caused the victims’ accounts to make unprofitable and illogical securities trades with the new accounts – referred to in the Complaint as the “Profit Accounts” – that benefitted the hackers.

    One version of the fraud involved causing the victims’ accounts to sell options contracts to the Profit Accounts, then to purchase the same contracts back minutes later for up to nine times the price. In another version of the fraud, they used the Profit Accounts to offer short sales of securities at prices well over market price and to force the victim accounts to make irrational purchases. (A short sale is a sale of stock that an investor does not own, but rather borrows from a stock lender and must eventually return.)

    Murmylyuk and a conspirator recruited foreign nationals visiting, studying, and living in the United States – including Russian nationals and Houston residents Anton Mezentsev, Galina Korelina, Mikhail Shatov and others – to open bank accounts into which illegal proceeds could be deposited. Murmylyuk and the conspirator then caused the proceeds of the sham trades to be transferred from the Profit Accounts into the those accounts, where the stolen money could be withdrawn.

    Fidelity, Scottrade, E*Trade, and Schwab have reported combined losses to date of approximately $1 million as a result of the fraudulent schemes.

    http://www.justice.gov/usao/nj/Press/files/Murmylyuk, Petr Charged News Release.html
  2. Damn those Russians!!

  3. nkhoi

    nkhoi Moderator

    only 1 mil? somehow they worked too hard.
  4. Options12

    Options12 Guest

    They also grabbed $450k from U.S. taxpayers:

    Meanwhile, Manhattan District Attorney Cyrus Vance, expanded upon a January indictment, alleging an elaborate scheme to engage in wholesale theft of unemployed people’s identities to file falsified tax returns. Murmylyuk was again the leader of an alleged conspiracy that involved recruiting eleven Kazakh student visa-holders through which he retrieved the more than $450,000 in stolen taxpayer funds.

    According to documents filed in court, MURMYLYUK created a fake employment-related website with the address www.jobcentral2.net. The site offered fictitious job placement services through a program it claimed was “sponsored by the government and intended for people with low income.” MURMYLYUK sent e-mails with a link to his fake website through legitimate job search forums and college listservs and, in the weeks that followed, hundreds of people visited his site and submitted personal identifying information.

    MURMYLYUK is accused of collecting the information submitted to his website, and using it to forge tax returns in victims’ names. Using an e-filing vendor, the defendant claimed fraudulent refunds ranging from approximately $3,500 to $6,500 each. MURMYLYUK successfully obtained refunds in the names of 108 of the approximately 300 different victims who had visited www.jobcentral2.net, yielding more than $450,000 in stolen taxpayer funds.

    MURMYLYUK recruited a group of students from Kazakhstan, many located on Russianlanguage social networking sites, to pen accounts at banks across the country and provide their account numbers, online passwords, and other data to MURMYLYUK for use in the scheme.

    The phony website has since been taken offline. Murmylyuk’s Kazakhi associates have also been indicted, but since many have returned to their home country they are charged in absentia.