Computer Crime Research Center


Internet fraud: con men nabbed

Date: October 12, 2005
By: Sarah Staples and Chad Skelton

In the twilight hours of Oct. 26, 2004, a plainclothes U.S. Secret Service agent stood by a grove of maple trees near a middle-class home in the suburb of Richmond, B.C.

Tom Musselwhite, a 20-year veteran in charge of western Canadian operations, had busted his share of bank and credit card scammers. This time, he was waiting to observe the takedown of a different breed of con man.

The suspect was an alleged member of an Internet-based identity theft and credit card fraud ring, whose tentacles stretched across North America, Latin America and Europe. Police considered him one of the gang's elite, the brains behind a Canadian document forgery and drugs operation.

And he was just 17 years old.

At precisely 6 p.m., Detective-Constable Mark Fenton, a computer crime investigator with Vancouver police department, gave the "go" order. Without the usual police warning to "open up," the door went in.

Armed officers from the Vancouver emergency response team, the local RCMP detachment and Vancouver police surrounded the youth as he sat at the dinner table eating lasagna with his father, brother and a teenage friend. His computer, switched on when officers arrived, was taken into evidence.

"We went in there and literally the fork just came out of the mouth," Fenton says. "Then I had to sit down with the parents and explain why we were there because obviously (they) were dumbfounded, to say the least."

The youth was driven, along with his stunned father, to the Richmond police station and questioned on suspicion of forging drivers' licences and other ID. Later that evening, his friend was arrested on allegations he peddled ecstasy over the Internet.

A second raid conducted simultaneously in nearby Surrey yielded a third arrest: that of a 19-year-old whose specialty, police allege, was procuring stolen credit card numbers and the equipment to make fake documents.

At the scene, Musselwhite placed a cellphone call to headquarters in Washington: the Canadian busts had gone down without a hitch, he said.

It was the same across the U.S., Latin America and Europe, where local police, aided by the Secret Service, carried out a sweep of raids netting at least 28 alleged high-ranking members of Shadowcrew in a sting code-named Operation Firewall.

Two days later, the Web portal was gone. Its home page had been replaced by a caricature of a jailbird gripping the bars of a prison cell, featuring the theme song from the Hollywood movie Mission Impossible playing in the background.

"You can imagine how this infuriated the Shadowcrew group because a lot of them see it as this battle against authority, against police," the special agent says.

"It was nice because (police left the message), 'if you had anything to do with it give us a call.' And somebody did give us a call."

(Type in today and the Secret Service's page has been replaced yet again. A Secret Service spokesperson says the agency won't confirm or deny it is monitoring ongoing changes to registration of the domain name.)

Based on court documents filed for the trial of the first 19 indicted Shadowcrew members scheduled for this month in Newark, N. J., and interviews with investigators, prosecutors and others, Shadowcrew was a kind of underworld bazaar.

Criminals who were carefully screened by fellow members sold drugs, laundered money and bought and sold 1.5 million stolen credit card and debit numbers gleaned from a variety of sources.

The stolen numbers and fake cards were used to buy and sell merchandise through e-commerce sites, pawnshops and online auction sites like eBay.

Shadowcrew members took in

$4.3 million in illicit profit in just over a year of the website's operation. But that corresponds only to the "provable loss" of thousands of credit card numbers undercover operatives managed to obtain from thieves.

A true estimate of the damage and its impact on potentially tens of thousands of victims worldwide would be "virtually incalculable," according to a former assistant U.S. attorney on the investigation team.

"There was so much in the way of counterfeit cards transversing the website at any one time, I don't know that anyone could ever fully quantify it," says Scott Christie, now a partner with the law firm of McCarter &English in Newark. "But it's not a stretch to say (the financial loss) was in the hundreds of millions."

In every G8 nation - and every major Canadian city - investigators say, former members of Shadowcrew who escaped arrest last October are continuing to pursue financial crimes through an Internet-aided, globally entrenched network with deepening ties to organized crime.

Cybermobs have a reputation for being exceedingly difficult to find, let alone investigate or prosecute, thanks in part to the sophisticated anonymizing software and hacker techniques they use to shield their activities.

Investigators also complain of a dearth of resources and personnel, and of uneven co-operation from some countries in extraditing organized criminals who are directing massive online scams against North American businesses and the public.

And through the great leveller that is the Internet, underworld figures traditionally associated with drug dealing and financial crimes are joining forces with teenagers, using them as "hackers for hire" or as lowly mules to cash out dishonest gains.

Vancouver police say prosecutors here are still discussing with their U.S. counterparts what, if any, charges to lay against the three arrested youths from B.C.

The father of the 17-year-old - whose identity cannot be divulged under provisions of the Youth Criminal Justice Act - acknowledges he's frustrated about the turn of events, although he remains optimistic.

"I'm pissed off," he said in an interview, referring to allegations about his son's key role in Shadowcrew. "Kids do stuff you don't even know about and when you find out, you're disappointed. (But) when the smoke clears, you'll find out he didn't have much to do with it."
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2006-11-26 23:42:26 - It is time to lower the age of... Jim Hall
2005-11-17 16:40:15 - It's Like the "Special olympics" even... alice
2005-10-17 06:39:12 - If a 17 year old can do so much damage,... MikeO
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