Day Trader Indicted in Computer Hacking and Securities Fraud Scheme Targeting Online Brokerage Accounts
A four-count indictment was returned today charging a self-described day trader with conspiracy to commit wire fraud, conspiracy to commit securities fraud and computer intrusions, securities fraud and conspiracy to commit money laundering.
Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office made the announcement.
As alleged in the indictment, between September 2014 and May 2017, Joseph Willner, 42, of Ambler, Pennsylvania, and others conspired to hack into victims’ online securities brokerage accounts and used them to place unauthorized trades, at times fraudulently liquidating existing positions in the victims’ accounts in order to fund the unauthorized trades.
The indictment further alleges that, as a part of the conspiracy, the defendant used brokerage accounts in his name to place “short sale” offers for publicly-traded companies’ stock at artificially high, above-market prices. Simultaneously, Willner’s co-conspirators hacked into victims’ online brokerage accounts and used them to place buy orders for the stock at the artificially high prices, matching Willner’s short sale offers. After using the victims’ accounts to purchase the stock, Willner and his co-conspirators then re-purchased the stock from the victims’ accounts at market or below-market prices. This series of fraudulent trades usually took place within minutes, and Willner immediately profited based on the difference between his artificially high short sale price, and the lower price at which he subsequently re-purchased the stock.
According to the indictment, while discussing the scheme in private messages on Twitter, one of Willner’s co-conspirators said: “legal trading too hard.” Willner responded that he would be a “good trading partner.” As a result of Willner and his co-conspirators’ alleged actions, the affected brokerage firms lost more than $2 million.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The FBI’s New York field office investigated the case. Trial Attorney Cory E. Jacobs of the Criminal Division’s Fraud Section, Securities and Financial Fraud Unit, and Assistant U.S. Attorneys Tiana A. Demas, Mark E. Bini and David Kessler of the U.S. Attorney’s Office, Business and Securities Fraud and National Security and Cybercrime Sections, are prosecuting the case. The U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission provided significant assistance in the investigation.