Four arrested in online banking scam

IDG News Service - Authorities have arrested two individuals in Switzerland and another two in San Francisco in connection with an Internet banking scam worth approximately $3.9 billion, according to the International Chamber of Commerce (ICC), which monitors banking fraud.

The scam involved Web sites designed to mimic those of Paris-based transaction clearing system Euroclear France SA and New York-based financial information service Bloomberg LP, said Chris Spillett, an information analyst at ICC's commercial crime bureau, yesterday.

Officials revealed last week that they had shut down the scam (see story).

"What [the fraudsters] have done is they've gone to a free Web server, 50megs.com, and mimicked the sites -- for example, www.bloomberg.50megs.com," said Spillett. Investors were lured into transferring funds, believing they were dealing with reputable institutions.

Several apparent victims of the scam have come forward, he said. "One is a U.S. businessman who's lost about $70,000," he said. "He's gone bankrupt; it's quite serious, really."

Spillett couldn't provide any details about the arrests. He said he believes the suspects were involved in the scheme but weren't its masterminds. "I think it will be quite impossible to track down who's behind this," Spillett said.

Paris-based ICC, a membership group that represents banks, brokerages and financial institutions, has no regulatory powers of its own but passes information about scams to the relevant authorities, Spillett said. The group has informed the Securities and Exchange Commission about the current case.

"We're very happy to see that the ring has been broken," said Euroclear spokesman Conor Leeson. He added that the Internet service provider hosting the fraudulent sites shut them down "within days" of being made aware of them late last year.

But perpetrators of such scams are hard to identify and can easily jump to another Internet service provider, Leeson said. "How can you monitor something as large and unwieldy as the Internet?" he asked.

"Unfortunately, it's not new to the Internet, scams of this nature," Leeson added. "The Internet is a tool which unfortunately seems to facilitate fraudsters. It's something all financial institutions need to be aware of."



Related stories:

• FTC tracks spammers and fraudsters, Feb. 14, 2001





• Beware of consultants peddling snake oil, Sept. 25, 2000





• The Cyber-Mod Squad sets out after crackers, June 19, 2000

Reprinted with permission from

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