Belarus Native Involved in Credit Card Processing ‘Scareware’ Scheme Sentenced to 4 Years in Prison
Defendant Extradited from Austria; Second Person Prosecuted in Connection with $71 million Cybercrime
A 37-year-old citizen of Belarus was sentenced today in U.S. District Court in Seattle to four years in prison for conspiracy to commit wire fraud, announced U.S. Attorney Annette L. Hayes. ALEXANDER MIHAILOVSKI was indicted in August 2012 for his role as a payment processor in a $71 million cybercrime scheme. He was arrested in Vienna, Austria in late 2015. MIHAILOVSKI was extradited to the U.S. to face charges a year ago. He pleaded guilty in August 2016. At the sentencing hearing U.S. District Judge Thomas S. Zilly said, “You provided an important part of the total scheme… by making it appear legitimate…. People who commit these crimes will be apprehended and will be punished.”
“Just like a bank robber needs a get-away driver, cyber fraudsters need people to turn their electronic scams into cash,” said U.S. Attorney Annette L. Hayes. “This defendant ran a credit card processing company that was essentially ripping off nearly $71 million dollars from unsuspecting computer users. Like so many others, he thought he would get away with his crimes. Instead, close cooperation with our worldwide law enforcement partners allowed us to track him down and get him back to the United States to face justice.”
According to records in the case, MIHAILOVSKI operated a credit card payment processing company called Mystique Enterprises, LTD, doing business as PSBILL, Smart Systems, and Failsafe Payments. MIHAILOVSKI and his company were part of an international cybercrime ring that netted $71 million by infecting victims’ computers with “scareware” and selling fraudulent antivirus software that was supposed to secure victims’ computers but was, in fact, useless.
The prosecution of MIHAILOVSKI is part of Operation Trident Tribunal, a coordinated enforcement action targeting international cybercrime rings that caused more than $71 million in total losses to more than one million computer users through the sale of fraudulent computer security software known as “scareware.” The scareware used in this scheme was malicious software that posed as legitimate computer security software. The scareware caused popup notices to appear on the victims’ computers with false warnings that the computers had been infected and prompted the victims to purchase fake anti-virus software with a credit card at a cost of up to $129. The scareware would often disable legitimate anti-virus software and lock-down other features of the computers, effectively preventing the victims from using their computers until they purchased the fake anti-virus software or reformatted their computers. An estimated 960,000 users were victimized by this scareware scheme, leading to $71 million in actual losses.
MIHAILOVSKI is the second foreign national prosecuted in this particular scareware scheme. In December 2012, Mikael Patrick Sallnert, 40, a citizen of Sweden, was also sentenced to four years in prison and was ordered to pay $650,000 in forfeiture. Sallnert also served as a credit card payment processor for the crime ring.
This case is being investigated by the FBI Seattle Division Cyber Task Force and other FBI entities. The case is being prosecuted by Assistant U.S. Attorneys Norman Barbosa and Francis Franze-Nakamura. Substantial assistance was provided by the Criminal Division’s Office of International Affairs and the Computer Crime and Intellectual Property Section.
Critical assistance in the investigation was provided by the Security Service of Ukraine, German Federal Criminal Police, Netherlands National High-Tech Crime Unit, London Metropolitan Police, Latvian State Police, Lithuanian Criminal Police Bureau, Swedish National Police Cyber Unit, French Police Judiciare, Royal Canadian Mounted Police, Romania’s Directorate for Combating Organized Crime, Cyprus National Police in cooperation with the Unit for Combating Money Laundering, the Danish National Police, and the Austrian Federal Ministry of Justice.