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Release No. 08-066
May 19, 2008
33 INDIVIDUALS IN U.S. AND ROMANIA INDICTED IN FEDERAL
RICO CASE THAT ALLEGES WIDESPREAD COMPUTER FRAUD
International Law Enforcement Cooperation Leads to Disruption of Organized Crime Ring that Utilized Phishing and Other Methods to Obtain Personal Data
Five people have been arrested over the past day after being indicted last week on federal racketeering charges for their involvement in an international bank fraud ring in which Romanians obtained personal credit information and American-based confederates created bogus debit and credit cards that were used to fraudulently obtain millions of dollars in cash.
The 65-count indictment returned by a grand jury on Thursday accuses 33 defendants of engaging in “phishing” and other surreptitious methods via the Internet to obtain personal data on thousands of victims. A phishing scheme uses the Internet to target large numbers of unwary individuals, using fraud and deceit to obtain personal and financial information such as names, addresses, bank account numbers, credit card numbers and Social Security numbers. Phishing schemes often work by sending out large numbers of counterfeit e-mail messages, which are made to appear as if they originated from legitimate banks, financial institutions or other companies. The e-mails direct victims to legitimate-appearing websites that are controlled by criminals and are designed to obtain personal information.
According to the indictment, the Romania-based members of the enterprise obtained thousands of credit and debit card accounts and related personal information by phishing, with more than 1.3 million spam emails sent in one phishing attack. Once directed to bogus websites, victims were prompted to enter information about their credit or debit cards, as well as personal identifying information. Romanian “suppliers” collected the victims’ information and sent the data to U.S.-based “cashiers” via Internet “chat” messages. The U.S.-based cashiers used hardware called encoders to record the fraudulently obtained information onto the magnetic strips on the back of credit and debit cards, and similar cards such as hotel keys. Cashiers then directed “runners” to test the fraudulent cards by checking balances or withdrawing small amounts of money at ATMs. The cards that were successfully tested, known as “cashable” cards, were used to withdraw money from ATMs or point of sale terminals that the cashiers had determined permitted the highest withdrawal limits. A portion of the proceeds was then wire transferred to the supplier who had provided the access device information.
“Partnerships and cooperation among all levels of law enforcement – both domestic and foreign – are the key to tackling criminal activity that knows no borders,” said United States Attorney Thomas P. O’Brien. “Just as street gangs do not respect municipal borders, computer criminals ignore international borders to reach into other countries and prey upon unsuspecting victims who have no idea their identities and money are going to thieves in another country.”
Salvador Hernandez, Assistant Director in Charge of the FBI in Los Angeles, stated: “Today's announcement demonstrates cooperation on many levels, including two nations collaborating and multiple law enforcement agencies that ignored foreign borders and jurisdictional boundaries to meet a common goal. The use of racketeering statutes is proof of our commitment to addressing an odious crime that took advantage of the basic trust and good nature of U.S. citizens. This criminal scheme was well thought out and structured by the numerous subjects charged today, but that challenge was met with the same organizational zeal and investigative skill employed by our agents and our law enforcement partners."
The racketeering case was announced today at two press conferences – one in Romania, where Deputy Attorney General Mark R. Filip joined the Romanian Prosecutor General to announce the Los Angeles case and a similar case out of Connecticut, and one in Los Angeles, where United States Attorney Thomas P. O’Brien joined FBI Assistant Director in Charge Salvador Hernandez and other law enforcement officials to discuss the Los Angeles case.
“International organized crime poses a serious threat not only to the United States and Romania, but to all nations,” Deputy Attorney General Mark R. Filip said in Romania. “Criminals who exploit the power and convenience of the Internet do not recognize national borders; therefore our efforts to prevent their attacks cannot end at our borders either. Through cooperation with our international partners, we can disrupt and dismantle these enterprises, just as we have done today with these indictments and arrests.”
Five of nine U.S.-based defendants were arrested last night and this morning in Southern California. Romanian law enforcement authorities executed search warrants in Romania earlier today in connection with the racketeering indictment.
The Los Angeles indictment alleges a conspiracy to violate the RICO Act; conspiracy in connection with access devices (credit and debit cards); production, use and trafficking in counterfeit access devices; bank fraud; aggravated identity theft; unauthorized access to a protected computer; possession of device making equipment; and a forfeiture allegation. The RICO conspiracy charge carries a maximum prison sentence of 20 years. The charge of access device fraud conspiracy carries a maximum sentence of seven and a half years in prison; the charge of production, use and trafficking in counterfeit access devices carries a maximum 10-year prison sentence; and possession of device making equipment carries a 15-year maximum prison sentence. The charge of bank fraud carries a maximum 30-year prison sentence. The unauthorized access charge carries a maximum prison sentence of five years, and aggravated identify theft carries a mandatory two-year prison sentence.
The individuals named in the indictment operated from locations in the United States and abroad including Canada, Pakistan, Portugal and Romania, and include both U.S. citizens and foreign nationals. Sonny Duc Vo, Alex Chung Luong and Leonard Gonzales are U.S. citizens. Nga Ngo, Thai Hoang Nguyen, Loi Tan Dang and Dung Phan are permanent U.S. legal residents from Vietnam. Hiep Thanh Tran is a U.S. permanent legal resident from Vietnam. Caroline Tath is a permanent U.S. legal resident from Cambodia. Hassan Parvez is a citizen of Pakistan. Rolando Soriano is a Mexican citizen and is currently charged in Los Angeles with illegal entry by an alien following deportation. Ovidiu-Ionut Nicola-Roman; Petru Bogdan Belbita; Stefan Sorin Ilinca; Sorin Alin Panait; Costel Bulugea; Nicolae Dragos Draghici; Florin Georgel Spiru; Marian Daniel Ciulean; Irinel Nicusor Stancu; Didi Gabriel Constantin; Mihai Draghici; Marius Sorin Tomescu; Lucian Zamfirache; Laurentiu Cristian Busca; Dan Ionescu; Marius Lnu; Alex Gabriel Paralescu; and Andreea Nicoleta Stancuta are Romanian citizens. An additional four individuals known only by their aliases, “Cryptmaster”; “PaulXSS”; “euro_pin_atm” and “SeleQtor” are believed to be Romanian citizens.
Tran and Tath were taken into custody last night in Costa Mesa, where they were staying at a hotel under a false name. Luong, Nguyen and Ngo were arrested this morning. All five defendants are expected to make their initial court appearances this afternoon in United States District Court in Los Angeles. Gonzalez, Phan, Vo and Dang are currently being sought by authorities in Southern California.
Seuong Wook Lee, a cashier in the scheme, pleaded guilty last Thursday in U.S. District Court in Los Angeles to racketeering conspiracy, bank fraud, access device fraud and unauthorized access of a protected computer.
"Today's indictments and arrests remind us that, as consumers, we must actively protect our personal financial information," said Catherine D. Tucker, Acting Special Agent in Charge, IRS - Criminal Investigation in Los Angeles. "To this end, IRS - Criminal Investigation, in conjunction with our law enforcement partners, will actively investigate and prosecute those who engage in internet, email, and other types of phishing scams that are designed to defraud their victims and gain access to their target's personal bank and financial accounts."
In a related case, seven Romanian citizens – including two named in the Los Angeles indictment, Nicola-Roman and Belbita – were charged in an indictment returned by a federal grand jury in New Haven, Conn., on Jan. 18, 2007, and unsealed on May 16, 2008, in connection with an Internet phishing scheme. The indictment alleges conspiracy to commit fraud in connection with access devices, conspiracy to commit bank fraud and aggravated identity theft.
“We will continue to work closely with our foreign and domestic law enforcement partners and employ the investigative tools available to bring organized criminals to justice,” said FBI Deputy Director John S. Pistole. “The recent cooperation and information sharing with our Romanian law enforcement partners and allies at the Southeast European Cooperative Initiative has been invaluable. Despite being separated by oceans, we are united in the fight against organized crime.”
An indictment contains allegations that a defendant has committed a crime. All persons charged in an indictment are presumed innocent until proven guilty.
The Los Angeles case is the result of a joint investigation involving the FBI, the Romanian General Inspectorate of Police, the U.S. Postal Inspection Service, IRS-Criminal Investigation, U.S. Citizenship and Immigration Services, and local law enforcement agencies including the Orange County District Attorney’s Office and the Seal Beach, Costa Mesa, Huntington Beach, Irvine, Westminster, Fullerton and Anaheim Police Departments. The United States Secret Service provided assistance.
"The U.S. Postal Inspection Service is committed to these types of investigations to ensure criminals cannot use the Postal Service to launder criminal proceeds. Today's success can be attributed to the cooperation of our domestic and international law enforcement partners," said B. Bernard Ferguson, Inspector in Charge, Los Angeles Division.
Christopher Shawkey, Costa Mesa Police Chief, stated: “This is another example of the outstanding relationship the Costa Mesa Police Department has with our law enforcement partners at the federal level. This was an incredibly complex investigation, and it took the expertise each agency offered to bring it to a successful conclusion. Each investigator, prosecutor, and officer involved in this investigation is to commended for their professionalism and dedication to duty.”
Release No. 08-066
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