Three indicted for alleged online brokerage scam

Three people are indicted on charges that they hacked online brokerage accounts.

A grand jury in Omaha, Nebraska, has indicted three people on charges of conspiracy, fraud and aggravated identity theft related to a "high-tech" scheme to hijack online brokerage accounts, the U.S. Department of Justice and the U.S. Securities and Exchange Commission announced.

The 23-count indictment, returned in January and unsealed Monday, charges Jaisankar Marimuthu, 32, and Chockalingam Ramanathan, 33, both of Chennai, India, each with one count of conspiracy, eight counts of computer fraud, six counts of wire fraud, two counts of securities fraud, and six counts of aggravated identity theft as part of this "hack, pump and dump" scheme.

The indictment also charges Thirugnanam Ramanathan, 34, a native of India and resident of Malaysia, with one count of conspiracy, two counts of computer fraud and two counts of aggravated identity theft, the DOJ said. Marimuthu and Thirugnanam Ramanathan have been arrested in Hong Kong.

The DOJ has identified more than 60 customers and nine brokerage firms in the U.S. and elsewhere as victims, with one of the brokerage firms reporting more than US US$2 million in losses. This case is the first time that individuals have been arrested overseas in connection with an online brokerage intrusion scheme perpetrated in the U.S., the DOJ said.

In a related action, the SEC filed a civil complaint against all three defendants Monday.

Between July and November, the defendants, operating primarily from Thailand and India, used their personal online brokerage accounts to purchase shares of several thinly-traded stocks, according to the indictment.

They then hacked into online brokerage accounts of others, using stolen user names and passwords, or established new brokerage accounts using stolen identities, the DOJ said. Using these accounts, the defendants made several unauthorized purchases of the same stocks to drive up the market price. Once the share prices were artificially inflated, the defendants sold their own shares for a substantial profit.

For example, Marimuthu placed orders on Aug. 28 through his personal online brokerage account, for 32,000 shares of stock at prices from US$2 to US$3.20 per share, the DOJ said. Chockalingam Ramanathan also placed an order through his personal online brokerage account to purchase 450 shares of the same stock for US$3.20 per share.

The same day, the defendants gained unauthorized access to the online brokerage account of an unsuspecting investor, according to the indictment. They then used this account to illegally acquire 26,000 shares of the same stock at prices from US$2.84 to US$3.40 per share, causing the stock's trading volume to rise to more than nine times its 15-day average.

Marimuthu then sold more than 30,000 shares of the stock at a substantial profit by Aug. 29, the DOJ said.

Marimuthu was arrested on Dec. 20, by Hong Kong police on charges of computer fraud, money laundering and possession of equipment to make a false instrument. These Hong Kong charges are for crimes similar to those in the U.S. indictment. Thirugnanam Ramanathan was arrested by authorities in Hong Kong on Jan. 26, at the request of the U.S. Chockalingam Ramanathan is at large.

The U.S. government will seek the extradition of the arrested defendants to face charges in Nebraska, the DOJ said.

The conspiracy and computer fraud charges in this case each carry a maximum sentence of five years in prison. Wire fraud and securities fraud carry maximum sentences of 20 years and 15 years respectively. Each count of aggravated identity theft adds two years in prison.

Join the PC World newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Grant Gross

IDG News Service
Show Comments

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?