US government cracks down on Internet fraud

More than 130 people have been arrested and US$17 million worth of property seized in an Internet fraud sweep announced Friday by three U.S. government agencies.

The sweep, announced by the U.S. Department of Justice, the U.S. Federal Bureau of Investigation and the U.S. Federal Trade Commission (FTC), included arrests for credit-card fraud, Internet auction fraud, theft of satellite television signals, identify theft, and a bonus Internet investment service.

One California man was charged with four counts of criminal infringement of a copyright and other crimes for allegedly using a camcorder to record movies in theaters, then selling them on the Internet. An Illinois defendant pleaded guilty to mail fraud and wire fraud for charging victims US$30 or $45 for a bogus business opportunity involving stuffing envelopes at home for $2 per envelope.

The initiative, called Operation E-Con, included support from the U.S. Postal Inspection Service, U.S. Secret Service, and the U.S. Bureau of Immigration and Customs Enforcement as well as a number of other state and local law enforcement agencies in the U.S. and in other countries. Operation E-Con, which began issuing indictments in January, has resulted in the arrest of 50 people this past week, and U.S. AttorneyÂ’s Offices have charged 48 people and received 12 guilty pleas this week, according to the U.S. Department of Justice (DOJ).

On Thursday, the FTC announced 45 separate civil and criminal actions against alleged Web scammers and deceptive spammers in Texas and elsewhere.

"Cyber swindles and dot cons present new challenges to law enforcement," U.S. Attorney General John Ashcroft said in a statement. "The Internet enables criminals to cloak themselves in anonymity, making it imperative that law enforcement act more quickly to stop newly emerging schemes before the perpetrators can disappear in the World Wide Web."

DOJ officials promised to continue to track down high-tech scam artists as aggressively as the agency has gone after "traditional hucksters." A DOJ spokeswoman said the announcement Friday is designed to show Internet scammers that cyber crime is a priority for U.S. law enforcement agencies.

Among the more inventive schemes alleged by the government agencies:

-- A California defendant is charged with six counts of wire fraud, relating to an alleged scheme to steal nearly $600,000 of computer equipment from businesses in Massachusetts and California. According to the indictment, the defendant set up a fictitious corporation, complete with a full-featured Web site, and a sham escrow company.

-- Two Maryland defendants are charged with devising a scheme to lure unsuspecting bank customers to "spoofed" bank Web sites, where victims would enter confidential account data. The defendants then would use the data to produce and fraudulently use ATM and credit cards.

-- Two California defendants have been indicted on fraud- and money laundering-related charges for setting up one of the largest Internet investment fraud cases in the country, according to the DOJ. The investment club allegedly netted more than US$60 million from 15,000 investors worldwide. The club's Web site allegedly guaranteed investors a 120 percent annual rate of return with "no risk of losing the investor’s principal investment," as well as substantial referral fees for directing others to the Web site, but the club never invested any of the victims' money. Instead, the funds were allegedly used by the two defendants and others to purchase millions of dollars of real properties in Mexico and Costa Rica, as well as a yacht and helicopter, and to funnel money to dozens of shell companies created in Costa Rica.

-- Five Pennsylvania defendants are indicted on a charge of conspiracy, relating to their allegedly obtaining identification information of residents of Mount Lebanon from the Mount Lebanon Municipal Tax Office, where the defendants were employed as janitors. The defendants then allegedly used that information to apply for credit cards over the Internet.

-- Two California defendants were indicted for one count of conspiracy to commit wire fraud and 41 counts of wire fraud. A man and his Russian-speaking wife allegedly operated a fraudulent Russian dating scheme. By either contacting male victims through various online personal ads, or posting their own online personal ads posing as Russian or Ukrainian women desiring a romantic relationship, the two allegedly bilked more than 400 victims of at least US$600,000 over three years.

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Grant Gross

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