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Feds Round Up Suspects in Net Fraud Sweep

By Keith Regan
Nov 21, 2003 7:50 AM PT

The Federal Bureau of Investigation and a handful of other law enforcement agencies have charged 125 people with a host of Internet-related crimes, ranging from identity theft and software piracy to auction fraud and hacking.

Feds Round Up Suspects in Net Fraud Sweep

The FBI said those arrested so far in Operation Cyber Sweep are responsible for bilking at least 125,000 victims out of more than US$100 million in cash, services and products. The agency said the investigation began October 1st and will continue throughout the holiday season.

Attorney General John Ashcroft said the push, coming as it does on the heels of Operation E-Con, which saw 90 similar cases pursued earlier this year, is designed to underscore that the Web "should be a conduit for communication, information and commerce, not an expressway for crime."

Top of the List

"Cybercrime is, and will continue to be, one of the FBI's top priorities," said FBI Assistant Director Jana Monroe. "As computers play a more prominent role in everyday society, we can expect criminals to continue to exploit vulnerabilities and utilize computers for illegal purposes."

The latest round of arrests comes less than a week after the Business Software Alliance (BSA) warned that a survey it commissioned showed fears of cybercrime, such as credit-card theft, are holding back e-commerce growth. The BSA said a concerted effort is needed among law enforcement, the business community and consumers to stem the tide of online crime and make the Web safer for e-business.

Banner Year

Cybercrime has gotten a boatload of attention in 2003, which began with the SQL Slammer worm raking the worldwide Internet backbone in January and also saw a sharp spike in the amount of identity theft being reported to authorities.

The U.S. government is not the only entity interested in pursuing Internet criminals. In addition to an earlier sweep by the FBI and other agencies, Microsoft recently announced the establishment of a fund to pay bounties of up to $250,000 for information that leads to the arrest of hackers responsible for launching virus and worm attacks on the world's Internet infrastructure.

"No single approach is going to work to curtail online crime," Patrick Gray, director of forensics and emergency response at Internet Security Systems, told the E-Commerce Times. "Law enforcement has a role, but it's only part of the puzzle."

Gray added that investigators have made huge advances in their methods of pursuing those responsible for Internet-related crimes. "There's better technology, better investigators and better cooperation," he said. "There's been a recognition that the need to get the bad guys outweighs whatever jurisdictional tensions there may have been in the past."

Border Patrol

In fact, the FBI said it worked with a host of other agencies on Operation Cyber Sweep, including 34 states' attorneys general, the U.S. Postal Inspection Service, the Secret Service and local agencies.

The cases reflect a range of online crimes, the FBI said, including fake escrow services on eBay and other auction sites, an Internet "fencing" operation in which stolen merchandise was unloaded via Web sales, and identity theft. One identity-theft ring alone was said to be responsible for 20 victims losing some $100,000.

One trend the FBI said it sees emerging is what it calls reshipping, in which illegal or fraudulent purchases are sent to a third party who then repackages and reships the items, often to overseas locations. The agency said it is seeing increased recruitment of reshippers, who often become fraud victims themselves, with their personal information used to obtain phony credit cards.

E-commerce has lost an estimated $500 million to date as a result of reshipping schemes, according to the FBI.

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