Investment Fraud

There was some news from the FBI this week about Investment Fraud.

WASHINGTON—Attorney General Eric Holder announced today the results of Operation Broken Trust, a nationwide operation organized by the Financial Fraud Enforcement Task Force to target investment fraud. To date, the operation has involved enforcement actions against 343 criminal defendants and 189 civil defendants for fraud schemes that harmed more than 120,000 victims throughout the country. The operation’s criminal cases involved more than $8.3 billion in estimated losses and the civil cases involved estimated losses of more than $2.1 billion. Operation Broken Trust is the first national operation of its kind to target a broad array of investment fraud schemes that directly prey upon the investing public.

In announcing the results of Operation Broken Trust, Attorney General Holder was joined by FBI Executive Assistant Director Shawn Henry, U.S. Securities and Exchange Commission (SEC) Director of Enforcement Robert Khuzami, U.S. Postal Inspection Service (USPIS) Chief Postal Inspector Guy Cottrell, Deputy Chief Rick Raven of the Internal Revenue Service Criminal Investigation (IRS-CI), Acting Director of Enforcement Vince McGonagle of the U.S. Commodity Futures Trading Commission (CFTC), and other members of the Financial Fraud Enforcement Task Force.

The interagency Financial Fraud Enforcement Task Force was established by President Obama to lead an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. Starting on Aug. 16, 2010, within a three-and-a-half month period, Operation Broken Trust involved 231 criminal cases and 60 civil enforcement actions. Eighty-seven defendants have been sentenced to prison, including several sentences of more than 20 years in prison.

“With this operation, the Financial Fraud Enforcement Task Force is sending a strong message,” said Attorney General Holder.  To the public: be alert for these frauds, take appropriate measures to protect yourself, and report such schemes to proper authorities when they occur. And to anyone operating or attempting to operate an investment scam: cheating investors out of their earnings and savings is no longer a safe business plan—we will use every tool at our disposal to find you, to stop you, and to bring you to justice.”

“This operation highlights the scope of this problem, and its impact on individuals from all walks of life,” said FBI Executive Assistant Director Henry. “This one sweep alone involves fraud schemes that harmed more than 120,000 victims. The schemes may change, but the underlying greed does not. Working with our partners, we in the FBI will use all the investigative techniques in our arsenal, including undercover operations, to bring those responsible to justice.”

“Fraud by well-known companies or high-profile executives gets the biggest headlines, but other scams are equally devastating to hard working families and retirees,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Victims want justice and don’t much care who the fraudster is or how unique the fraud.  Today’s actions underscore that law enforcement agrees and will pursue fraud in whatever form.”
Enforcement actions taken as a result of Operation Broken Trust involve a range of different investment fraud schemes, all of which prey directly on the investing public. The operators of these schemes often promise high returns to investors, but engage in little to no legitimate investment activity. Such schemes include Ponzi schemes, affinity fraud, prime bank/high-yield investment scams, foreign exchange (FOREX) frauds, business opportunity fraud, and other similar schemes. In some instances, operators of these schemes filed for bankruptcy in an attempt to avoid claims by victim-investors.

“The U.S. Postal Inspection Service has a long tradition of protecting postal customers from these types of investment and Ponzi scams and bringing those responsible to justice,” said USPIS Chief Postal Inspector Cottrell. “The Postal Inspection Service constantly strives to protect our customers and the general public from falling victim to these scams that claim millions of dollars every year.”

“The results announced today demonstrate the effectiveness of federal civil and criminal law enforcement in bringing to justice those who have engaged in financial fraud schemes,” said Acting Director McGonagle of the Division of Enforcement for CFTC. “The CFTC continues to devote substantial enforcement resources to combat financial fraud. We appreciate the partnership with the other members of the President’s Financial Fraud Enforcement Task Force to protect the public from financial fraudsters.”

“Securities and investment frauds are serious offenses which have brought financial ruin to many citizens. Promoters of Ponzi schemes prey upon trusting investors and then steal their hard earned money,” said Rick Raven, Deputy Chief, IRS Criminal Investigation. “IRS Criminal Investigation is proud to bring our forensic accounting skills to this joint venture with our law enforcement partners to put a stop to this and other types of white collar fraud.”

Operation Broken Trust was conducted in conjunction with various Department of Justice components—including the U.S. Attorney Offices, the FBI, the Criminal and Civil Divisions and the U.S. Trustee Program—as well as the SEC, USPIS, the CFTC, IRS-CI, the Federal Trade Commission, the U.S. Secret Service, and the National Association of Attorneys General.

As a part of Operation Broken Trust, the task force is making the public aware of resources available to protect against these types of fraud and how to report fraud when it occurs. To learn more about investment scams, how to take steps to protect yourself from scams, or how to report investment fraud if you believe you have been victimized, go to The website includes links to a wide array of task force member resources.

The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit

Congratulations IC3!

On November 9th, 2010 the Internet Crime Complaint Center (IC3) logged it’s 2 millionth customer!  This is an amazing number, especially when you consider that not all scams and fraud are even reported.

This is a good thing, since it means that people are reporting the scams, which will give the FBI, National While Collar Crime Center and the Bureau of Justice Assistance (the agencies that partnered together to form the IC3) more information to try and go after these people and help warn people about these scams.

The IC3 receives, develops, and refers cyber crime complaints to local, state, federal, and international law enforcement agencies. The IC3 gives cyber crime victims a convenient and easy-to-use reporting mechanism that alerts authorities of suspected criminal or civil violations.

Since its inception, the IC3 has referred 757,016 criminal complaints to law enforcement around the globe. The majority of referrals involved fraud in which the complainant incurred a financial loss. The total reported loss from these referrals is approximately $1.7 billion, with a median reported loss of more than $500 per complaint.*

Medicare Fraud

It is always good to hear about a case where the “bad guys” are busted!

WASHINGTON—Ninety-four people have been charged for their alleged participation in schemes to collectively submit more than $251 million in false claims to the Medicare program in the continuing operation of the Medicare Fraud Strike Force in Miami; Baton Rouge, Louisiana; Brooklyn, New York; Detroit; and Houston, announced Attorney General Eric Holder, Department of Health and Human Services (HHS) Secretary Kathleen Sebelius, FBI Director Robert Mueller, and Daniel R. Levinson, Inspector General of HHS. The operation announced today is the largest federal health care fraud takedown since Medicare Fraud Strike Force operations began in 2007.

The joint DOJ-HHS Medicare Fraud Strike Force is a multi-agency team of federal, state, and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing. More than 360 law enforcement agents from the FBI, HHS-Office of Inspector General (HHS-OIG), multiple Medicaid Fraud Control Units, and other state and local law enforcement agencies participated in today’s operation.

“Our continued Strike Force operations reflect the unprecedented commitment that inspired the creation of the Health Care Fraud Prevention and Enforcement Action Team in May 2009,” said Attorney General Holder. “With today’s arrests, we’re putting would-be criminals on notice: Health care fraud is no longer a safe bet. The federal government is working aggressively—and collaboratively—to pursue health care criminals around the country and to bring these offenders to justice.”

“Today’s arrests send a strong message that attempts to defraud Medicare will not be tolerated,” said Secretary Sebelius. “With the help of new tools in the Affordable Care Act, including stiffer penalties and better information sharing, we will continue to work with our federal, state, and local partners to stamp out Medicare fraud and protect beneficiaries and the American taxpayer.”

Charges were unsealed today against 94 individuals who are accused of various Medicare fraud-related offenses, including conspiracy to defraud the Medicare program, criminal false claims, violations of the anti-kickback statutes and money laundering. The charges are based on a variety of fraud schemes, including physical therapy and occupational therapy schemes, home health care schemes, HIV infusion fraud schemes, and durable medical equipment (DME) schemes. Thirty-six defendants charged in these schemes have been arrested in Miami, New York, Baton Rouge, and Detroit, and additional arrests are expected throughout the day.

According to the court documents, the defendants charged today participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and oftentimes, never provided. In many cases, indictments and complaints allege that beneficiaries accepted cash kickbacks in return for allowing providers to submit forms saying they had received the treatments that, in reality, were unnecessary or never provided. Collectively, the doctors, health care company owners, executives and others charged in the indictments and complaints are accused of conspiring to submit more than $251 million in false claims to the Medicare program.

In Miami, 24 defendants were charged for allegedly participating in various fraud schemes that led to approximately $103 million in false billings. According to court documents, the fraud schemes involved fraudulent billing for HIV infusion services, home health care and physical therapy services, DME and pharmaceutical medications. The defendants include owners and operators of companies, doctors, nurses, and patient recruiters, as well as a medical biller who is alleged to have billed approximately $49 million for fraudulent services.

Thirty-one defendants were charged in Baton Rouge for various schemes allegedly involving fraudulent claims for DME totaling approximately $32 million. The defendants include the owners and operators of nine different purported medical services companies and four doctors, 14 patient recruiters, and other individuals who allegedly worked at the medical services companies.

Twenty-two defendants were charged in Brooklyn for their alleged participation in schemes to submit fraudulent claims totaling approximately $78 million. These fraud schemes involved false billing for physical and occupational therapy and DME. The defendants include the owners and operators, patient recruiters and employees at three different purported medical clinics and a medical equipment company, as well as three doctors. According to court documents, six of the defendants charged are serial Medicare beneficiaries, who purported to seek medical treatment from numerous providers, causing the submission of multiple claims to Medicare for purported medical treatments.

In Detroit, 11 defendants were charged for their alleged roles in schemes to submit fraudulent claims to Medicare for home health services, nerve conduction tests, and injection and infusion therapy sessions. The schemes involved a total alleged fraud of approximately $35 million and five different purported medical services companies.

Four defendants were also charged in Houston for their alleged roles in a $3 million scheme to submit fraudulent claims for DME.

In addition to making arrests around the country, law enforcement agents are executing search warrants in connection with ongoing health care fraud investigations.

“Today’s charges allege attempts by individuals to defraud the Medicare program of $251 million,” said FBI Director Robert S. Mueller, III. “Countless Americans rely on Medicare for their well-being, and the FBI, working in conjunction with our federal agency partners, is resolute in its commitment to stop those who would illegally manipulate the system.”

“Today’s arrests illustrate how health care fraud schemes can replicate virally and migrate rapidly across communities,” said Daniel R. Levinson, Inspector General of HHS. “To combat this fraud, the government’s response must also be swift, agile, and organized—a HEAT initiative goal which is well illustrated by today’s Strike Force actions.”

The Strike Force operations in Miami, Baton Rouge, Brooklyn, Detroit and Houston are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. The HEAT task force, co-chaired by Acting Deputy Attorney General Gary G. Grindler and Deputy Secretary Bill Corr, is made up of top-level law enforcement agents, prosecutors and staff from both departments and their operating divisions. In the May 2009 announcement, Attorney General Holder and Secretary Sebelius announced the expansion of the Strike Force into Detroit and Houston to build upon existing partnerships between the agencies in a heightened effort to reduce fraud and recover taxpayer dollars. In December 2009, Strike Force operations were expanded to Brooklyn, Baton Rouge and Tampa.

Since its inception in March 2007 with Phase One in South Florida and continuing through its most recent expansion into Tampa, Fla., the Strike Force has obtained indictments of more than 810 individuals and organizations that collectively have billed the Medicare program for more than $1.85 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

The cases announced today are being prosecuted and investigated by Strike Force teams comprised of attorneys from the Fraud Section in the Justice Department’s Criminal Division and from the U.S. Attorneys’ Offices for the Southern District of Florida, the Eastern District of New York, the Middle District of Louisiana, the Eastern District of Michigan and the Southern District of Texas; and agents from the FBI and HHS-OIG.

The Railroad Retirement Board Office of Inspector General and the Office of Personnel Management-Office of Inspector General also participated in today’s operation.

An indictment is merely an allegation, and defendants are presumed innocent until and unless proven guilty.

To learn more about the HEAT team, go to:

Scams and a connection to terrorism

I have thought for a LONG time that there was a connection between scams and terrorists, but because I did not want to be seen as a conspiracy theory person I did not talk about it a lot. Well, now there is an FBI press release that supports that theory.

Al Qaeda Supporter Pleads Guilty to Supporting Terrorist Organization
Kansas City Man Also Admits to Bank Fraud, Overseas Money Laundering

KANSAS CITY, MO—Beth Phillips, United States Attorney for the Western District of Missouri, announced today that a Kansas City, Mo., man pleaded guilty in federal court today to his role in a conspiracy to provide material support to the terrorist organization al Qaeda. He also pleaded guilty to bank fraud and money laundering.

“National security is the highest priority of the Department of Justice,” Phillips said. “I applaud the diligent work of our law enforcement partners from local, state and federal agencies that serve on the Heart of America Joint Terrorism Task Force. These agencies have made significant investments of manpower and resources to the task force, and I appreciate their commitment to defeating terrorism. Much of their work is done behind the scenes, investigating and gathering information, but they play a crucial role in preventing terrorist activities.”

Khalid Ouazzani, 32, of Kansas City, waived his right to a grand jury and pleaded guilty before U.S. District Judge Howard F. Sachs to a federal information that charges him with conspiracy to provide material support to a terrorist organization. Ouazzani also pleaded guilty to charges contained in an indictment that was returned under seal by a federal grand jury in Kansas City on Feb. 3, 2010.

Ouazzani, a native of Morocco and a naturalized citizen of the United States, swore an oath of allegiance to al Qaeda in June 2008. Ouazzani admitted that, from August 2007 to February 2010, he participated in a conspiracy to provide material support or resources to al Qaeda.

Ouazzani also admitted that he personally provided more than $23,000 to al Qaeda and performed other tasks at the request of and for the benefit of al Qaeda. Ouazzani had conversations with others about various ways to support al Qaeda, including plans for them to fight in Afghanistan, Iraq, or Somalia.

“Citizens here in the heartland should be alert to suspicious activity and never hesitate to report their concerns to law enforcement. This case serves as a reminder that terrorist-related activities can occur anywhere,” said Special Agent in Charge Brian A. Truchon of the Federal Bureau of Investigation’s Kansas City field office.

Ouazzani agreed to contribute $6,500 to al Qaeda in August 2007. A co-conspirator, who is not identified in court documents, made that payment on Ouazzani’s behalf. Ouazzani repaid the co-conspirator in November 2007 through a wire transfer to the co-conspirator’s bank account in the United Arab Emirates. Those funds came from Ouazzani’s sale of his business, Hafssa LLC, doing business as Truman Used Auto Parts, a retail operation that bought and sold used auto parts and used motor vehicles.

In June or July 2008, Ouazzani also agreed to pay al Qaeda $17,000, which represented his profit from the sale of an apartment in the United Arab Emirates that was owned by Ouazzani and a co-conspirator (who is not identified in court documents).

Bank Fraud Scheme

Ouazzani obtained a $175,000 line of credit commercial loan from Union Bank in April 2007 for Hafssa LLC (Truman Used Auto Parts). Under the terms of the loan, the funds were to be used as working capital for his business. Ouazzani admitted that he submitted false financial information about himself and the company to obtain the loan, and used substantial amounts of the loan proceeds for various personal purposes.

Ouazzani made only approximately $13,000 in payments on this loan. In September 2008 Union Bank wrote off the loan (then in the amount of $174,028) as uncollectible. On Feb. 11, 2009, Union Bank obtained a civil default judgment against Ouazzani and Hafssa LLC in the amount of $177,001.

Money Laundering

Ouazzani admitted that he used part of the proceeds of the Union Bank loan to purchase an apartment in the United Arab Emirates with a co-conspirator.

On May 23, 2007, Ouazzani caused a wire transfer of $112,830 to be sent to a bank account in the United Arab Emirates. The funds for this wire transfer included funds obtained from the $175,000 Union Bank loan and involved a series of transactions designed to make it more difficult to trace the funds.

Ouazzani used the wire-transferred funds to purchase an apartment in the United Arab Emirates, which he later sold for a profit of approximately $17,000. Ouazzani requested a co-conspirator to pay this $17,000 to al Qaeda.

“The criminal justice system is a valuable tool for disrupting terrorist plots and bringing terrorists to justice,” Phillips said. “We must use every means—criminal prosecutions as well as intelligence and military operations—to protect the American people. Federal prosecutions not only result in long prison sentences, but yield valuable intelligence that can be used in the fight against al Qaeda and other terrorist organizations.”

Under federal statutes, Ouazzani is subject to a sentence of up to 65 years in federal prison without parole, plus a fine up to $1 million and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorneys J. Daniel Stewart, David M. Ketchmark and Brian P. Casey and Special Assistant U.S. Attorney Alex Menzel of the U.S. Attorney’s Office for the Western District of Missouri, with assistance from attorneys at the Justice Department’s National Security Division, including the Counterterrorism Section. It was investigated by the Heart of America Joint Terrorism Task Force, led by the Federal Bureau of Investigation, with the assistance of the Missouri Department of Social Services – Division of Legal Services Investigation Section.

Heart of America Joint Terrorism Task Force
Federal Bureau of Investigation
Bureau of Alcohol, Tobacco, and Firearms
Defense Criminal Investigative Service
Federal Air Marshals Service
IRS-Criminal Investigation
Kansas City, Kan., Police Department
Kansas City, Mo., Police Department
Kansas Highway Patrol
Missouri State Highway Patrol
Overland Park, Kan., Police Department
U.S. Attorney’s Offices for the Western District of Missouri and the District of Kansas
U.S. Immigration and Customs Enforcement
U.S. Marshals Service
U.S. Postal Inspection Service
U.S. Secret Service

National Center for Disaster Fraud

It is a sad fact that natural disasters bring out the con-artists and scammers.  Why?  Because they prey on people’s feelings and wanting to help those in need.

The National Center for Disaster Fraud established a hotline in January where you can report suspected fraud.  The number is (866) 720-5721, or you can email them at

To read the FBI press release on the National Center for Disater Fraud go to

Pop-Up Security Warnings Pose Threats

Pop-Up Security Warnings Pose Threats

The FBI warned consumers today about an ongoing threat involving pop-up security messages that appear while they are on the Internet. The messages may contain a virus that could harm your computer, cause costly repairs or, even worse, lead to identity theft. The messages contain scareware, fake or rogue anti-virus software that looks authentic.

The message may display what appears to be a real-time, anti-virus scan of your hard drive. The scareware will show a list of reputable software icons; however, you can’t click a link to go to the real site to review or see recommendations. Cyber criminals use botnets—collections of compromised computers—to push the software, and advertisements on websites deliver it. This is known as malicious advertising or “malvertising.”

Once the pop-up warning appears, it can’t be easily closed by clicking the “close” or “X” buttons. If you click the pop-up to purchase the software, a form to collect payment information for the bogus product launches. In some instances, the scareware can install malicious code onto your computer, whether you click the warning or not. This is more likely to happen if your computer has an account that has rights to install software.

Downloading the software could result in viruses, malicious software called Trojans, and/or keyloggers—hardware that records passwords and sensitive data—being installed on your computer. Malicious software can cause costly damages for individual users and financial institutions. The FBI estimates scareware has cost victims more than $150 million.

Cyber criminals use easy-to-remember names and associate them with known applications. Beware of pop-up warnings that are a variation of recognized security software. You should research the exact name of the software being offered. Take precautions to ensure operating systems are updated and security software is current. If you receive these anti-virus pop-ups, close the browser or shut down your computer system. You should run a full anti-virus scan whenever the computer is turned back on.

If you have experienced the anti-virus pop-ups or a similar scam, notify the Internet Crime Complaint Center (IC3) by filing a complaint at

Rothstein Investment

This press release can be found at

FBI and IRS Seeking to Identify Victims and Individuals with Information in Rothstein Investigation

The Miami Division of the Federal Bureau of Investigation (FBI) and the Miami Field Office of the Internal Revenue Service (IRS) are seeking information from individuals who have invested in the Rothstein Structured Settlement Investment (RSSI) or from individuals who have information that would be helpful to the investigation. To facilitate information gathering, the FBI has established a dedicated e-mail address and an informational telephone line 1-800-CALL-FBI, “Rothstein Option.”

Details of the investigation cannot be discussed at this time, as the investigation is ongoing. However, the FBI and IRS are seeking to identify victims and to obtain any information to determine the extent of any potential fraud.

In an effort to determine the scope of the matter and the amount of losses that may be involved, investigators are requesting that individuals provide:

Basic contact information (name, address, telephone numbers, e-mail address.)

Amount of investments/losses with the Rothstein Structured Settlement Investment.

Whether you can verify your investments by providing the most recent statements.

Any additional information that may be helpful.

Information may be provided via dedicated e-mail address

 or to informational telephone line 1-800-CALL-FBI, “Rothstein Option” (1-800-225-5324.)

 If you have investigative information that may aid the criminal investigation, you may also submit it via email or telephone. For those who would like to return funds received from Rothstein please call the 1-800 number and someone will get back with you with specific instructions on how to return the funds.

 Hard copy documentation may be mailed to:

FBI Victim Assistance Program

Rothstein Investment

16320 NW 2nd Avenue

Miami, Florida 33169

If it is determined that you are a victim, the FBI will be in touch with you. Please note that due to the expected number of responses, it may be several days before you are contacted.

Mortgage Fraud

This press release can be found at

TAMPA—United States Attorney A. Brian Albritton today announced the results of a nine-month-long Mortgage Fraud Surge investigation that has resulted in charges against more than 100 defendants and involves allegations concerning more than $400 million in loans procured by fraud and more than 700 properties. U.S. Attorney Albritton is holding events throughout the district this week to highlight the announcement.

There are currently mortgage fraud-related charges pending against approximately 500 defendants in federal mortgage fraud cases around the nation. The cases concern both mortgage schemes designed to defraud mortgage lenders and “foreclosure rescue schemes” which prey on distressed homeowners.

“This initiative sends a clear message that mortgage fraud will not be tolerated. We must protect the integrity of the real estate market in our communities, which is a major contributor to the health of our economy, here and throughout the country,” said U.S. Attorney Albritton.

Florida’s Mortgage Fraud Surge was launched in late January 2009 in response to the epidemic of mortgage fraud throughout the state, which began during Florida’s real estate boom earlier this decade. To address this wide scale problem, the U.S. Attorney’s Office for the Middle District of Florida, along with the Federal Bureau of Investigation (FBI) in both its Tampa and Jacksonville Divisions, began a nine-month intensive effort to identify, investigate, and prosecute mortgage fraud in all of its forms.

To accomplish the Surge, the FBI and the U.S. Attorney’s Office for the Middle District of Florida devoted significant additional personnel and resources to investigating and prosecuting mortgage fraud cases. All of the Assistant U.S. Attorneys in the Ft. Myers, Orlando, and Jacksonville offices responsible for criminal matters handled mortgage fraud investigations, and in the District’s largest office, Tampa, over half of the Criminal Division Assistant U.S. Attorneys were assigned mortgage fraud matters. In addition, FBI Special Agent in Charge Steven E. Ibison of the Tampa Division and FBI Special Agent in Charge Jim Casey of the Jacksonville Division established mortgage fraud task forces in their respective jurisdictions. A number of state and federal law enforcement agencies joined these mortgage fraud task forces, and the agents, investigators, and other law enforcement personnel from these participating agencies conducted an intensive and wide-ranging investigation into hundreds of mortgage fraud leads during this Surge phase. Along with the FBI, the agencies that joined in the Surge and who participated in the mortgage fraud task forces are: the Internal Revenue Service-Criminal Investigation, U.S. Secret Service, U.S. Housing and Urban Development Office of Inspector General, U.S. Postal Inspection Service, Florida Department of Law Enforcement, Florida Department of Financial Services/Division of Insurance Fraud, Florida Office of Financial Regulation, Florida Department of Business and Professional Regulation, Lee County Sheriff’s Office (Ft. Myers Division only), Collier County Sheriff’s Office (Ft. Myers Division only) and Brevard County Sheriff’s Office (Orlando Division only).

The U.S. Attorney’s Office charged mortgage fraud defendants throughout the Middle District of Florida. The number of defendants charged by office breaks down as follows: Ft. Myers-32; Tampa-30; Orlando-19; and Jacksonville-24. Of these defendants, 7 are related to cases under seal and not in the public record at this juncture.

An indictment or complaint is merely a formal charge that a defendant has committed a violation of the federal criminal laws, and every defendant is presumed innocent unless, and until, proven guilty.

 The surge investigation completed on October 31, 2009, and announced today is the first phase of a continuing effort to investigate and prosecute not only mortgage fraud professionals and other individuals who have engaged in multiple fraudulent mortgage transactions, but also larger organizations and even financial institutions.

Cyber Threats

re-posted from

Thank you and good afternoon. I am happy to be back in San Francisco, and back at the Commonwealth Club.

Today, I want to talk about cyber threats. So it seems fitting that my remarks are being broadcast on the Club’s national radio program, airing on XM Radio and iTunes, and streaming live to Club members. This is going on all around us, but if Skip hadn’t mentioned it, we would be none the wiser. Our lives are impacted by the Internet all the time, whether we can see it or not.

The Internet has thrown wide the windows of the world, allowing us to learn and communicate and conduct business in ways that were unimaginable 20 years ago. This is the upside of globalization, as author Tom Friedman has noted in best-sellers such as “The World is Flat.” But the downside of our increasingly flat world is that the Internet is not just a conduit for commerce, but also a conduit for crime.

The Internet has created virtual doors into our lives, our finances, our businesses, and our national security. Criminals, spies, and terrorists are testing our doorknobs every day, looking for a way in.

Cyber crime is a nebulous concept. It is difficult to grasp intangible threats, and easy to dismiss them as unlikely to happen to you. So far, too little attention has been paid to cyber threats—and their consequences.

But what if I told you that as you sit here today, strangers were walking through your offices, homes, and dorm rooms? What if they were opening your drawers, reading your files, accessing your financial information, or stealing your company’s research and development?

Well, that is happening, right now, in homes and offices and schools around the world. Intruders are reaching into our networks every day, looking for valuable information. And unfortunately, they are finding it, because many of us are unaware of the threat these persons pose to our privacy, our economic stability, and even our national security.

Most of us assume we will not be targets of cyber crime. We are not as careful as we know we should be.  Let me give you an example.

Not long ago, the head one of our nation’s domestic agencies received an e-mail purporting to be from his bank. It looked perfectly legitimate, and asked him to verify some information. He started to follow the instructions, but then realized this might not be such a good idea.

It turned out that he was just a few clicks away from falling into a classic Internet “phishing” scam—“phishing” with a “P-H.” This is someone who spends a good deal of his professional life warning others about the perils of cyber crime. Yet he barely caught himself in time.

He definitely should have known better. I can say this with certainty, because it was me.

After changing all our passwords, I tried to pass the incident off to my wife as a “teachable moment.” To which she replied: “It is not my teachable moment. However, it is our money. No more Internet banking for you!”

So with that as a backdrop, today I want to talk about the nature of cyber threats, the FBI’s role in combating them, and finally, how we can help each other to keep them at bay.

* * *

Let me start by giving you two examples of what the FBI investigates on a daily basis.

In July 2008, a California oil and gas company called Pacific Energy Resources contacted the FBI and the Long Beach Police to report a computer attack. Six computer servers had been rendered inoperable, disabling the critical leak-detection systems on three off-shore oil platforms. This was the last in a series of network attacks, which cost the company over $100,000 in losses.

The investigation led us to a former IT contractor. After he had been let go, he retaliated by remotely accessing the system. His actions could potentially have resulted in significant environmental damage.  He pled guilty last month to a federal computer intrusion charge, and faces up to 10 years in prison.

And this past April, someone hacked into the database of the Virginia Department of Health Professionals. The intruder blocked over 8 million patient records—records that hospitals, doctors, and pharmacies depend on in order to accurately prescribe and dispense medication. Those records are no longer blocked, and our investigation continues.

As you can see, cyber cases can have costly—and potentially deadly—consequences.

Again, most of us assume our systems have nothing that would interest a hacker or spy. But we never know exactly what information might have value to a criminal. Information is power, period.

Whenever an intruder opens a door to our networks, there is a clear risk to individual privacy and intellectual property—not to mention economic and national security.

My eyes were first opened to these risks back in the early 1990s, when I read a book called “The Cuckoo’s Egg.” It chronicles the electronic adventure of Cliff Stoll, then a systems manager at a Berkeley laboratory. In the mid-1980s, he noticed an accounting disparity of 75 cents. This was before the Internet as we know it existed. Cyber threats were just beginning to appear on our radars.

He tracked it to an unauthorized user who had repeatedly broken into the system and then used the lab’s computers to tap into military networks. He eventually traced the attacks to a German hacker who was part of an espionage ring.

The book was prescient. Twenty years later, the whole world is online. And because the web offers near-total anonymity, it is that much more difficult to discern the identity, motives, and location of an intruder.

At the start of a cyber investigation, we do not know whether we are dealing with a spy, a company insider, or an organized criminal group. Something that looks like an ordinary phishing scam may be an attempt by a terrorist group to raise funding for an operation. An intrusion into a corporate network could be the work of a high-school hacker across the street, or a hostile foreign power across the ocean.

Cyber threats present a unique challenge to law enforcement because we have a tendency to compartmentalize our investigations. Criminal cases are usually separate from espionage cases, which in turn are separate from counterterrorism cases. But when it comes to cyber threats, there is almost always some overlap.

The FBI is both a law enforcement and national security agency, which means we can and must address every angle of a cyber case. This is critical, because what may start as a criminal investigation may lead to a national security threat.

Take, for example, a next-generation bank robbery that occurred last fall. A group of cyber criminals orchestrated a highly sophisticated attack on a major financial institution. Hackers found their way into the network of this institution, and altered data to allow them to increase the funds available for a number of accounts. They also stole account data and created duplicate ATM cards. Then, one day in early fall, they struck.

Within 24 hours, the thieves targeted more than 2,100 ATMs in 280 cities around the world. They inserted their phony ATM cards, and then walked away with more than $9 million. Arrests have been made internationally, and our investigation continues.

To put it in perspective, imagine for a moment that these groups had simultaneously entered dozens of banks, armed with assault weapons, and emptied the vaults. It would have been one of the most notorious bank heists in history. But instead, the attack was planned and executed under the radar, using computers and fiber-optic cables as weapons. They did it without a shot being fired, and then disappeared back into the ether.

Such techniques make global deterrence a challenge, to put it mildly. The perpetrators can be anyplace in the world. And so can the victims. And, for that matter, the evidence.

At a minimum, piecing together a case requires close collaboration with our counterparts in other countries. But actually prosecuting one requires harmonizing different criminal justice systems, all of which work according to the laws of their own lands.

The global scale and scope of such attacks puts law enforcement at a disadvantage. The investigative challenges may seem insurmountable.

But we do have a significant advantage: partnerships. Partnerships with law enforcement and intelligence communities across the world. Partnerships with universities, corporations, and small businesses.  Partnerships with citizens such as yourselves.

* * *

After the September 11th terrorist attacks, the FBI’s mindset and mission changed fundamentally. We could no longer focus our efforts on investigating terrorist attacks after the fact; we had to prevent them from happening in the first place. The only way to do that is to gather and analyze intelligence, and share it with those who need it.

The same mindset is true for our cyber responsibilities. The FBI can bridge both criminal and national security cases. So we are uniquely positioned to facilitate joint investigations that cross both local and international jurisdictions.

Within the government, the FBI has established the National Cyber Investigative Joint Task Force. This task force brings together law enforcement, intelligence, and defense agencies to focus on high-priority cyber threats.

But cyber threats take us well beyond partnerships with government alone. The FBI runs a program called InfraGard, which is one of our most important links to the private sector. We exchange information with partners from a host of industries, from computer software companies to chemical corporations. They are the experts on our critical infrastructure, the majority of which rely on computer networks. We have 32,000 members and counting, and those relationships have helped us to prevent risk from becoming reality.

And our partnerships stretch beyond our borders. For example, a substantial amount of cyber crime originates in Eastern Europe. And so we have embedded FBI agents in several police agencies there, to assist full-time on cyber investigations. Our relationship with the Romanian National Police is an example of the results of such cooperation: In the past year alone, we have dismantled organized criminal groups and arrested over 100 individuals, both here and in Romania.

And just this morning, we announced a major takedown in an international cyber investigation. A group of criminals in the United States and Egypt was engaged in a wide-ranging “phishing” scam. They targeted American financial institutions, and also approximately 5,000 American citizens. The FBI, the Secret Service, and state and local law enforcement cooperated closely with our Egyptian counterparts. As a result, earlier today we arrested over 50 subjects in the United States and Egypt.

This is the first joint cyber effort between the United States and Egypt. It is the largest international “phishing” case ever conducted. And it shows the power of our global partnerships in the face of global cyber criminal networks.

Those are just a small sampling of our many partnerships. Yet we are still outnumbered by cyber criminals. And that is where you come in.

Just as the police cannot come by every home or business, every night, to make sure the doors are locked, we must all take ownership of cyber security.

Cyber crime might not seem real until it hits you. But every personal, academic, corporate, and government network plays a role in national security. And given the extent of the damage cyber attacks can cause, it is important for all of us to protect ourselves, and each other.

If you are a basic user, then make sure to enable basic protections for your network—firewalls, anti-virus software, strong passwords, and security patches. And if you are part of a large corporate or academic network, start thinking of cyber security as a mission-critical component, and not an afterthought.

Investing in cyber security is akin to buying hazard insurance for a house. You invest relatively little to guard against losing everything.

Finally, talk to us. The more information we have, the more effective we can be at preventing you from becoming a victim of cyber crime. Whenever companies or institutions inform us of a potential breach, we have the chance to gather, analyze, and share critical intelligence. You never know when a single scrap of information may lead to the takedown of a global ring of cyber criminals, or even a terrorist cell.  Remember the example of Cliff Stoll: a 75-cent billing disparity was no mere accounting error. It was the key to uncovering an international espionage ring.

* * *

For better or worse—and I generally think for better—cyberspace is here to stay. We live in a wireless world, and we have grown accustomed to its convenience.

We are all used navigating with GPS, checking our e-mail at the airport, trading stocks online, and—for most of us, anyway—paying bills online. “Tweeting” or updating your Facebook status from anywhere is no longer a luxury but an expectation.

There is no going back. Technology will continue its march forward, and criminals will take full advantage of it. We in the FBI liken our challenge to a “cyber arms race,” where both sides are competing to stay ahead of the other.

We have to bring the fight to them. We have to work together, as a united front—government, private industry, and the public.

We know the game plan of our adversaries. They will keep twisting doorknobs and picking locks until they find a way in. But we must not let them in. We must change the locks. We must bar the doors. And we must sound the alarms when we notice anything out of the ordinary.

We are all citizens of the Internet, and we must also be its stewards. We all have a responsibility to protect the infrastructure that protects the world. It will not be easy. But together, we are up to the task.

I will leave you with just one more warning. Many of you may be familiar with the Nigerian e-mail scam, which offers the recipient the “opportunity” to make millions—if they could just help the author with a few illegal money transfers.

If you ever receive a similar e-mail purporting to be from me—as has happened in the past—delete it! Especially if it asks you for money. Take it from me—having to memorize all those new passwords is no picnic.


Shawn Mosch
Co-Founder of
There is strength in numbers!

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One week to Scam Jam

It is only one week until Scam Jam in Portland, Oregon.


Please join us at Reed College on Saturday, October 17th from 9am to 3pm.

Learn how to protect yourself from ID theft, investment fraud, repair scams, financial exploitation . . . plus speak with Shawn Mosch of Scam Victims United!

You can also go to to see footage from past events.

Shawn Mosch
Co-Founder of

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