The United States Attorney’s Offices for the Southern District of New York and the Northern District of Georgia recently announced three indictments charging several defendants with, among other things, computer hacking, theft and fraud. [US v. Shalon, No. 15-cr-00333 (S.D.N.Y.); US v. Murgio, No. 15-cr-00769 (S.D.N.Y.); and US v. Shalon, No. 15-cr-00393 (N.D.Ga.)] More specifically, the grand juries hearing these cases charged the defendants with computer hacking, securities and wire fraud, identity theft, illegal internet gambling, conspiracy to commit money laundering, and operating an unlicensed money transmitter. These cases are noteworthy not only because of the sheer magnitude of the enterprise described by federal prosecutors, but also because of the manner in which they highlight the increasingly aggressive posture that the Justice Department continues to take toward cybercrime.
According to the US Attorney, the defendants hacked into the computer systems of several large financial services companies and financial news publishers. Federal prosecutors did not identify the companies involved, but other news sources identified at least some of them as JPMorgan Chase, ETrade, Scottrade, TDAmeritrade, Fidelity Investments, and Dow Jones. The defendants allegedly stole personal information for more than 100 million people and used it to, among other things, market securities in a deceptive manner by arranging to have prospective purchasers cold-called.
The defendants’ other activities allegedly included operating illegal online casinos, payment processing for criminals, operating an illegal bitcoin exchange, and laundering money through up to 75 shell companies and accounts around the world. In the course of doing so, the defendants purportedly procured and used over 200 false identification documents which included over 30 false passports issued by almost 20 different countries, as well as servers located in Egypt, the Czech Republic, South Africa, Brazil and other countries. The US Attorney believes the defendants generated hundreds of millions of dollars in illegal proceeds. Many of the charged offenses carry federal prison terms of 20 years.
These indictments demonstrate plainly that the Justice Department continues to aggressively prosecuting internet crimes, and to develop its capability to investigate even the most sophisticated computer-related offenses. Interestingly, many county prosecutors offices have internet or computer crimes sections or squads, but it seems that the federal government continues to take the lead in this area. The reason for this is plain – the federal authorities – as opposed to State and county prosecutors – are the only law enforcement authorities with the resources to handle such cases.
Additionally, financial fraud and theft-related internet offenses are not the only types of cases that interest federal prosecutors. Most internet child pornography cases, which involve the distribution and/or exchange of images online, are also handled on the federal level.
Thus, defendants charged with internet-related crimes will probably be facing federal, as opposed to state-level, charges, and their cases will be heard in federal court. The stakes on these cases will be very high. Generally speaking, prison exposure, as well as the dollar amount of monetary fines and penalties, is significantly greater in federal cases. Federal law and procedure also tends to be much more complex than the state analogs.
Our Firm tracks developments in this evolving area of law, and represents defendants charged with internet and/or computer-related offenses in federal court. If you have been charged with cybercrime, do not speak to the law enforcement authorities investigating your case; rather, insist on speaking to a lawyer and contact us immediately.