Prepared Remarks of Attorney General John Ashcroft
Press Conference for "Operation E-Con"
May 16, 2003
(Note: The Attorney General often deviates from prepared remarks.)
Good morning. Today the Department of Justice is announcing a decisive, national, coordinated effort to root out and take action against some of the leading forms of online economic crime - "Operation E-Con."
Internet fraud and other forms of online economic crime are among the fastest-growing crimes. The vast majority of people use the Internet for beneficial purposes. But the Internet is also used for unscrupulous and criminal activity.
The activities include multimillion-dollar swindles, online auction scams, identity theft, business-opportunity frauds, and piracy of software and other copyrighted material, and these are just some of the cyber schemes victimizing people and businesses across America and around the world.
These cyber swindles and "dot cons" present new challenges to law enforcement. The Internet enables criminals to cloak themselves in anonymity, making it imperative that law enforcement act more quickly to stop new schemes before the perpetrators can disappear into the World Wide Web.
Because the Internet transcends national borders, law enforcement must be creative and cooperative to combat successfully online fraud. A vigorous and concerted response to online economic crime is needed to reverse these trends.
That is why I am pleased to announce "Operation E-Con", along with FBI Director Robert Mueller, FTC Chairman Timothy Muris, Special Agent in Charge Allan Doody, Assistant Attorney General Michael Chertoff, Deputy Assistant Director of U.S. Secret Service James Burch and Gary Stoops of the National White Collar Crime Center.
"Operation E-Con" is a coordinated operation that involves pursuing cases through:
- 43 United States Attorneys' Offices in 31 states;
- 32 FBI field offices;
- The Postal Inspection Service, the U.S. Secret Service, the Bureau of Immigration and Customs Enforcement, the FTC; and
- State and local law enforcement authorities.
Since January 1, 2003, "Operation E-Con" has undertaken:
- More than 90 investigations, involving 89,000 victims and losses of more than $176 million;
- The execution of 73 search and seizure warrants; and
- The charging or conviction of 135 individuals.
This week alone, federal agents and U.S. Attorneys have:
- Executed 55 search and seizure warrants;
- Arrested 50 persons;
- Charged 48 persons by indictment, information, or criminal complaint; and
- Obtained 12 guilty pleas.
"Operation E-Con" sends a clear message to those trolling the Internet for victims. Illegal activities in the virtual world have real-life consequences.
Since its inception in January 2003, "Operation E-Con" has seen successes, although serious criminal activity facilitated through the Internet remains a high priority for law enforcement.
The Internet Fraud Complaint Center (IFCC) - a joint project of the FBI and the National White-Collar Crime Center - reports that in 2002, it referred more than 48,000 Internet-related fraud complaints to law enforcement. This total reflects an increase of nearly 300 percent over the number of fraud complaints that the IFCC referred in 2001.
Similarly, the Federal Trade Commission reported that over the past three years, there has been a steady increase in both the numbers and the percentages of Internet-related fraud complaints that it has received. In 2002, for example, Internet-related fraud complaints made up nearly half of more than 218,000 fraud complaints that the FTC's Consumer Sentinel database received.
The cases in "Operation E-Con" illustrate the different types of online fraud that law enforcement, both domestically and internationally, is fighting. These include Internet auction fraud, nondelivery of goods and services offered online, credit-card fraud, investment fraud, business fraud, and identity theft.
For example, in Los Angeles, a man was indicted on fraud-related charges for allegedly running an elaborate scheme to defraud sellers of computers. The defendant allegedly set up a fictitious company with a fully featured website to place orders for computers. Then he steered prospective computer sellers to a sham escrow company he created, also with a fully featured website. The escrow website made it appear that he had deposited the funds to be held in escrow, so the computer sellers would ship their products to him.
In San Diego, a husband and wife were indicted on fraud charges for allegedly operating a fraudulent "Russian dating" scheme directed at lonely men worldwide. The pair allegedly either contacted male victims through various on-line personal ads, or posted their own on-line personal ads posing as Russian or Ukrainian women desiring a romantic relationship. The couple allegedly bilked more than 400 victims of at least $600,000 over a period of approximately three years.
Many of these frauds cause financial harm to thousands of victims throughout the United States and other countries.
In the Southern District of Illinois, a defendant pleaded guilty this week to mail and wire fraud charges for running a bogus business-opportunity scheme. Through the Internet and direct mail, the defendant persuaded 50,000 people from across the United States to pay a $30 to $45 registration fee for an at-home envelope stuffing business. The scam raised $2 million.
In Eastern California, two defendants have pleaded guilty to fraud-related charges in a massive Internet investment fraud scheme that netted nearly $60 million from 15,000 victims in 60 countries worldwide. The investment scheme guaranteed investors 120 percent annual rate of return with no risk of losing the principal investment.
A number of the "Operation E-Con" cases show the growing use of identity theft to commit fraud. In Maryland, for example, two men have been charged with wire fraud for allegedly luring unsuspecting bank customers to forged or "spoofed" bank websites. Though the customers thought the confidential account data they submitted was going to legitimate banks, the defendants used the data to produce and fraudulently use ATM and credit cards.
Other cases targeted in "Operation E-Con" involve intellectual property crimes such as software theft and piracy, sometimes combined with fraud.
In Los Angeles, one man was indicted after he allegedly attended numerous screenings of unreleased major motion pictures, then surreptitiously taped the movies and sold them on the Internet.
Let me stress that the success of "Operation E-Con" stems directly from close cooperation among law enforcement agencies at all levels of government, and with various private-sector organizations such as the National White Collar Crime Center.
I also want to call attention to the roles played by two sections of the Justice Department's Criminal Division: the Fraud Section, led by section chief Josh Hochberg, working with trial attorney Jonathan Rusch. The Fraud Section has been overseeing the Department's nationwide initiative to increase Internet fraud prosecutions. The Department's Computer Crime and Intellectual Property Section is responsible for overseeing the Department's prosecutorial efforts against computer network intrusion cases and intellectual property crimes.
To report Internet crime, citizens can log on to www.IFCCFBI.gov.