SEC busts Pa. man for securities fraud, ID theft

IDG News Service - The U.S. Securities and Exchange Commission has filed civil charges against a Pennsylvania man for computer hacking and identity theft in a scheme last July to dump worthless options for Cisco Systems Inc. stock.
The case against Van T. Dinh, 19, of Phoenixville, Pa., is the first time computer hacking and identity theft have both played a part in a fraud prosecution by the commission, the SEC said today.
Dinh was allegedly motivated to commit the crime after being stuck with 7,200 worthless options contracts for Cisco stock. Exercising the options would have resulted in a loss of approximately $37,000, the SEC said, citing court documents filed in July.
Instead, Dinh allegedly set up an elaborate scheme to unload the shares in a bogus transaction. First, the teenager allegedly lured participants in an online stock discussion group to download a key-logging program that he claimed was a stock-charting tool, the SEC said.
After using the program to monitor the information typed on victims' machines, Dinh allegedly obtained the log-in and password information for a TD Waterhouse Investor Services Inc. online brokerage account owned by a Westboro, Mass., man. With the victim's account information in hand, Dinh used his own online brokerage account to create orders to sell the worthless options, then hacked into the victim's online account and created corresponding buy orders for the options, the SEC said.
Dinh was also charged by the U.S. attorney's office in Massachusetts with securities fraud and mail and wire fraud resulting from the illegal sale, the SEC said.
The SEC used the case to trumpet its online investigative technique, noting that the commission identified Dinh as the alleged culprit within days of the crime, despite his attempts to cover his tracks online through the use of multiple e-mail accounts and Web sites that enable Internet users to shield their identities.
The agency also said that the case should serve as a warning to investors who use online brokerage services. Users should be suspicious of programs they are asked to download and install and should use antivirus and firewall software to shield their computers from intrusions, the SEC said.