Day Trader Indicted in Computer Hacking and Securities Fraud Scheme Targeting Online Brokerage Accounts
Defendant Profited by Trading Securities Using Victims’ Hacked Brokerage Accounts
Earlier today, a four-count indictment was returned by a federal grand jury in the Eastern District of New York, charging Joseph P. Willner, 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. As alleged in the indictment and other court filings, between September 2014 and May 2017, Willner engaged in a computer intrusion and securities fraud scheme, illegally profiting from a series of coordinated trades involving more than 50 hacked online brokerage accounts. The defendant laundered the proceeds of his crimes using Bitcoin, a cryptocurrency. Willner was arrested on a criminal complaint on June 13, 2017 in Ambler, Pennsylvania.
Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Kenneth A. Blanco, Acting Assistant Attorney General for the Justice Department’s Criminal Division and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI) announced the charges.
“Cybercriminals continue to come up with innovative ways to steal money from victims using the Internet, as in this case where defendant Willner’s co-conspirators allegedly hacked into the victims’ accounts in order to execute fraudulent short sales,” stated Acting United States Attorney Rohde. “Regardless of what innovative ways fraudsters come up with, this Office, together with our law enforcement partners, will prosecute them to the fullest extent of the law.” Ms. Rohde expressed her grateful appreciation to the United States Securities and Exchange Commission and the United States Commodity Futures Trading Commission for their significant assistance in the investigation.
“This case involves a 21st Century cyber boiler room, except the buyers were not even aware they were purchasing shares of stock,” stated FBI Assistant Director-in-Charge Sweeney. “As alleged, the scheme involved hacking into victims’ online securities brokerage accounts to make unauthorized trades that would benefit the defendant through the use of short sales. The scheme ultimately led to a loss of over $2 million to victim accounts. The FBI will continue to investigate and bring to justice those who commit securities fraud in an effort to ensure the fairness and integrity of our financial markets.”
As alleged in the indictment and other court filings, between September 2014 and May 2017, Willner and others conspired to hack into victims’ online securities brokerage accounts and used them to place unauthorized trades. As a part of the conspiracy, Willner 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. While discussing the scheme in private messages on Twitter, one of Willner’s co-conspirators stated: “legal trading too hard.” Willner responded that he would be a “good trading partner.”
As a result of Willner’s and his co-conspirators’ alleged actions, the affected brokerage firms lost more than $2 million. If convicted, the defendant faces a maximum sentence of 20 years’ imprisonment.
The charges announced today are allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being handled by the U.S. Attorney’s Office’s Business and Securities Fraud and National Security and Cybercrime Sections, and the Securities and Financial Fraud Unit of the Department of Justice, Fraud Section. Assistant United States Attorneys Tiana A. Demas, Mark E. Bini and David Kessler and Trial Attorney Cory E. Jacobs of the Criminal Division’s Fraud Section are in charge of the prosecution.
JOSEPH P. WILLNER
E.D.N.Y. Docket No. 17-CR-620 (LDH)