DOJ announces online fraud convictions

53 convicted, 103 more arrested in Operation Web Snare

WASHINGTON -- Fifty-three people have been convicted and another 103 arrested in a huge U.S. Department of Justice sweep for online fraud and other Internet-related crimes, the DOJ announced yesterday.

Operation Web Snare, which ran from June 1 until yesterday, resulted in 160 investigations across the U.S. for a variety of Internet-related crimes, including denial-of-service attacks, computer hacking, the sale of counterfeit software, and so-called "phishing," in which scammers send victims legitimate-looking e-mail soliciting bank or credit card numbers.

Web Snare is the "largest and most successful" law enforcement operation related to online fraud, U.S. Attorney General John Ashcroft said during a press conference. "Operation Web Snare also shows that America's justice community is seeking to anticipate, to outthink and to adapt to new trends in Internet crime," he said.

More than 150,000 victims lost more than $215 million in the scams the DOJ and other law enforcement agencies investigated during Web Snare, Ashcroft said. In addition to the DOJ and its FBI investigations, the U.S. Postal Inspection Service, the Federal Trade Commission, the Secret Service and the Bureau of Immigration and Customs Enforcement contributed to the operation, he added.

Among those caught in Operation Web Snare were a CEO of a communications company, and five other people, accused of using denial-of-service attacks against online competitors. Jay R. Echouafni, CEO of Orbit Communication Corp., a satellite TV equipment dealer based in Massachusetts, was indicted by a federal grand jury this week on multiple charges of conspiracy and causing damage to protected computers, according to the DOJ. Echouafni and a business partner are accused of hiring computer hackers in the U.S. and U.K. to attack the Web sites of competitors.

The sustained attacks allegedly began in October 2003 and caused competing companies to lose more than $2 million in revenue and costs associated with responding to the attacks. The attacks also disrupted other commercial and government sites hosted by the victims' Internet service providers, the DOJ said.

Orbit Communication's telephone numbers listed online were disconnected as of yesterday.

Also as part of Operation Web Snare, in Utah R. Mark Pentrack was sentenced to more than 11 years in prison after he pleaded guilty to mail fraud, misuse of a Social Security number, attempted destruction of evidence, and making a false statement in connection with an Internet fraud scheme.

Pentrack offered car parts, aircraft parts and other items for sale over the Internet but did not own those items, according to the DOJ. To conceal his activities, he hired secretaries in five states outside Utah to receive payments from would-be buyers, used an e-mail service based in Australia and used an anonymizing program when conducting online activities. More than 10 people sent Pentrack more than $200,000 for those items. After being arrested, Pentrack tried to enlist two people to enter his apartment and remove two computers and other materials relating to his scheme before federal authorities could find and seize them. He also made false statements concerning his scheme to federal authorities.

In the Central District of California, a federal grand jury indicted a Romanian computer hacker and five U.S. residents on charges that they allegedly conspired to steal more than $10 million in computer equipment from Ingram Micro Inc. in Santa Ana, Calif. The indictment alleges that Calin Mateias hacked into Ingram Micro's online ordering system and placed fraudulent orders for computers and computer equipment. Mateias allegedly directed that the equipment be sent to dozens of addresses scattered throughout the U.S. as part of an Internet fraud ring.

Microsoft Corp. and Americans for a Secure Internet (ASI), a cybersecurity advocacy group, praised the DOJ's efforts in Operation Web Snare. The arrests show that collaboration between law enforcement agencies and private companies "can help stop cybercriminals who are employing increasingly sophisticated and destructive tactics," Brad Smith, senior vice president and general counsel for Microsoft, said in a statement.

"This was a message to Internet criminals that there's a cop on the beat and he's got his eye on them," added Morgan Reed, vice president of public affairs for the Association for Competitive Technology and a member of ASI. "We hope the recent crackdown is just the start of the long-term campaign against Internet crime."

This was the second Internet-related announcement from the DOJ in two days. On Wednesday, the agency announced that it had raided five homes and one Internet service provider in what it called the first federal enforcement action against piracy on peer-to-peer networks.

Copyright © 2004 IDG Communications, Inc.

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