Internet Fraud Investigation Operation Cyber Loss

fbi.gov, Oct 28, 2004

The FBI and Department of Justice are joined by the National White Collar Crime Center (NW3C) today to announce that criminal charges have been brought against approximately 90 individuals and companies as part of a nationwide series of investigations into Internet fraud, code named "Operation Cyber Loss," initiated by the Internet Fraud Complaint Center (IFCC). Subjects are facing a variety of Federal and state criminal charges which include fraud by wire, mail fraud, bank fraud, money laundering, and intellectual property right violations. The fraud schemes exposed as part of this Operation represent over 56,000 victims who suffered cumulative losses in excess of $117 million.

Among the fraud schemes targeted are those involving on-line auction fraud, systemic non-delivery of merchandise purchased over the Internet, credit/debit card fraud, bank fraud, investment fraud, multi-level marketing and Ponzi/Pyramid schemes. Internet fraud can be defined as any fraudulent scheme in which one or more components of the Internet, such as Web sites, chat rooms, and e-mail, play a significant role in offering nonexistent goods or services to consumers, communicating false or fraudulent representations about the schemes to consumers, or transmitting victims' funds, access devices, or other items of value to the control of the scheme's perpetrators. Many of these cases were initiated as a result of fraud complaints the IFCC received from individuals and businesses.

"Just as neighborhood watch programs keep watch over their neighborhoods and report suspicious activity to law enforcement, Internet users now have a 'cyber community watch' program. When individual citizens, businesses, and consumer agencies work with law enforcement at all levels, we help ensure the safety and security of the Internet," said Attorney General Ashcroft.

Director Louis J. Freeh stated, "The criminal charges being announced today demonstrate the critically important role that the IFCC plays in combating crime in cyber space. It is essential that law enforcement, e-commerce, and victims of crime have this electronic clearinghouse to expeditiously disseminate Internet fraud cases to the appropriate agency for investigation."

The IFCC became operational on May 8, 2000. The IFCC's mission is to address fraud committed over the Internet. For victims of Internet fraud, the IFCC provides a convenient and easy way to alert authorities of a suspected criminal or civil violation. Victims of Internet crime are able to go directly to the IFCC web-site at www.ifccfbi.gov, to submit their complaint information, relieving considerable frustration for them in trying to determine which law enforcement agency should receive their complaint. For law enforcement and regulatory agencies, the IFCC offers a central repository for complaints related to Internet fraud. All complaints are sent through an internal quality assurance process and are referred to the appropriate law enforcement and regulatory agencies. The IFCC uses the information to quantify fraud patterns, and provide timely statistical data of current fraud trends. The IFCC, located in Fairmont, WV, is a joint operation between the FBI and the National White Collar Crime Center (NW3C). It is the first project of its kind, a partnership between a federal law enforcement agency, and a non-profit private organization, serving Federal, state and local law enforcement agencies .

The accomplishments of this Operation are a direct result of the close working relationship law enforcement has developed with the private sector and e-commerce companies. As an example, Pay Pal, Inc. and Motley Fool have provided great assistance in identifying individuals engaged in wrong doing and reported that to the IFCC. The support and cooperation provided the FBI by other private sector companies such as Microsoft has also been instrumental in the success of Operation Cyber Loss.

"As the IFCC continues to expand its capabilities to better accommodate the needs of businesses, it has begun the work of creating the appropriate channels that will enable regular communication with representatives from the private-industry across the nation," said West Virginia State Auditor Glen B. Gainer III, chairman of the board of directors for the National White Collar Crime Center.

These cases have been coordinated by 28 FBI Field Offices along with participation by the U.S. Postal Inspectors Service; the Internal Revenue Service-Criminal Investigative Division; the Securities and Exchange Commission; U.S. Customs Service, the Competition Bureau in Canada; and numerous state and local law enforcement entities including the New York City Police Department; New Jersey State Police; Salt Lake City Police Department; Springville Police Department; Oregon High-Tech Team, the Oregon State Attorney's General Office; College Station, Texas, Police Department; Seattle Police Department; and the Monroe, Washington, Police Department; Boca Raton, Florida, Police Department; Florida State Comptrollers Office; Connecticut State Police; Chula Vista, California, Police Department; El Paso, Texas, Police Department; and the San Diego Police Department.