Computer Crime Research Center


Mob nets $650 million from phone and internet fraud

Date: February 16, 2005
Source: Times On Line
By: Simon Freeman

For almost a century, members of the Gambino crime family maintained a violent grip over New York as ruthless practitioners of murder, drug pushing, racketeering and extortion.

Now six men, at least two of whom have been linked to what was once one of America's premier Mafioso gangs, have been told they face lengthy prison terms for the mob's first foray into the more prosaic, but no less lucrative, 21st century crime of phone and internet fraud.

The six, led by alleged Gambino captain Salvatore LoCascio, have pleaded guilty to a series of charges including money laundering and conspiracy. Their surprise admissions at a District Court in Brooklyn today came as jury selection was to have begun on one of the most eagerly-awaited underworld trials for years.

Prosecutors have described the operation as as one of the biggest consumer frauds in history. It netted more than $650 million (£344m) in five years. The defendants built up a complex web of shell corporations, advertising free services such as psychic readings, phone sex and horoscopes.

Dialling the numbers triggered unauthorised monthly charges on callers' phone bills, which over the period of the scam amounted to about $420 million (£223m).

One of the members, Richard Martino - known to the New York tabloids as the X-Rated Mobster - was also charged in connection with a scheme that placed unauthorized charges on the credit cards of customers seeking "free tours" of pornographic websites.

Customers who believed the sites had merely requested their credit card details for age verification were defrauded of a total of US$230 million (£122m).

The elaborate schemes brought in so much money that the defendants were able to purchase a telephone company and bank in Missouri, according to court documents. They also created at least 64 companies and opened a host of foreign bank accounts through which to launder the money, the documents said.

Roslynn Mauskopf, the Brooklyn attorney who brought the charges, said: "The defendants created a web of lies and deception to trap unwary consumers on the internet.

"They did so by lulling consumers into a false sense of security and tricking them into providing their credit and debit card information.

"As result, millions of dollars went from consumers' bank accounts and into the defendants' pockets. This massive scheme undermined public trust in e-commerce."

The charges had initially linked the six directly to the Gambino Family, but the organised-crime racketeering charge, which had been a central part of the case, was shelved after days plea negotiations.

Even without facing the most severe racketeering charge, Martino, 45, billed by investigators as symbolic of a new breed of mobster with business acumen, faces up to ten years in prison.

He pleaded guilty to conspiracy to commit wire and mail fraud.

LoCascio, who is the son of imprisoned former Gambino consiglieri (adviser) Frank LoCascio, pleaded guilty to a charge of money laundering. He faces almost 9 years in prison.

Three other associates - Dennis Martino, brother of Richard Martino, Thomas Pugliese and Andrew Campos - pleaded guilty to a count of conspiracy to commit mail and telephone fraud. Zev Mustafa, pleaded guilty to money laundering in connection with the scheme.

The six will return to court in May for sentencing.

Dave Thomas, head of the FBI's Computer Intrusion Section, said that there remains no evidence indicating that the mafia had moved into internet crime in a major way.

He said: “We haven't seen a big move with the traditional Italian-based Mafia groups to the Internet, not like we have with the Eastern European hacking groups. But as the money to be made becomes more and more widely publicized, they probably will.”

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