American Darknet Vendor and Costa Rican Pharmacist Charged with Narcotics and Money Laundering Violations

A dual U.S.-Costa Rican citizen and a Costa Rican citizen, both of whom reside in Costa Rica, were indicted by a federal grand jury in the District of Columbia for their illegal sales of opioids on the darknet.

The seven-count indictment charged David Brian Pate, 44, a U.S. and Costa Rican citizen, and Jose Luis Fung Hou, 38, a Costa Rican citizen, with counts of conspiring with persons to distribute controlled substances, distribution of controlled substances, conspiring with persons to import controlled substances, conspiring to launder money, and laundering of monetary instruments.

“As alleged in the indictment, the defendants helped fuel our deadly opioid drug epidemic by hiding behind the darknet and cryptocurrency to profit from the sale of illicit opioids into the United States,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division.  “Fortunately, by working with our law enforcement partners across the United States and overseas, we were able to uncover this darknet opioid market and bring to justice those responsible.”

“These charges are a warning to drug traffickers worldwide that neither the shroud of the darknet or of virtual currency can hide their illegal activities from the vigilance of U.S. law enforcement,” said Acting U.S. Attorney Michael Sherwin for the District of Columbia.  “We are firmly committed to combatting the problem of opioid abuse and breaking through sophisticated cyber-enabled barriers employed by criminals to hide their activities.” 

“The opioid epidemic is a crisis crippling many families in this country,” said Special Agent in Charge Kelly R. Jackson of the IRS Criminal Investigation (CI) Washington D.C. Field Office.  “This international group profited off of people’s addictions, revictimizing them when they were already vulnerable. This group purposely distributed opioids that did not contain a safety additive and prevented inhalation of the drug.  Years ago when drug dealers and traffickers moved to the darknet and started using virtual currency to conceal and expand their network, CI also moved our playing field to the darknet to bring groups like this to justice.”

“Today’s case is a great example of how the DEA has infiltrated the darknet and, together with our law enforcement partners, proven that every criminal attempting to sell these deadly drugs is within the reach of the law,” said Special Agent in Charge Jesse R. Fong of the U.S. Drug Enforcement Administration’s (DEA) Washington Field Division. 

The indictment alleges that Pate illegally purchased narcotics, including OxyContin and morphine pills, primarily from Fung, a pharmacist in Costa Rica.  Pate would launder payments to Fung to purchase narcotics.  Pate then sold these narcotics on numerous darknet markets, including Silk Road and AlphaBay, in exchange for bitcoin.  Pate utilized various online monikers including “buyersclub” on darknet markets, online forums, and bitcoin exchanges.  Pate advertised that he was selling the “old formula” of OxyContin, which did not contain tamper-resistant features such as a crush-proof feature that prevented a user from inhaling or injecting the pills after pulverizing them. 

The indictment further alleges that Pate’s darknet sales involved him sending bulk shipments of narcotics in pill form from Costa Rica, often concealed in tourist souvenirs such as maracas, to co-conspirator re-shippers in the United States.  Pate would then send the re-shippers a list of customer orders, which included customer’s names, the customer’s shipping address, and the quantity of pills they purchased.  The re-shippers created smaller packages of pills, which they then mailed to the customer.  Once the shipments were received by the customer, the darknet market would release funds in bitcoin, which were held in escrow until the transaction was completed, into Pate’s account on the darknet market.  Customers paid Pate over 23,903 bitcoin for these darknet market sales.  The co-conspirators also laundered payments in the form of bitcoin and international wire transfers. 

The charges in the pleadings are merely allegations, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law. 

IRS-CI Cyber Crimes Unit, DEA, and the U.S. Postal Inspection Service investigated this case.  The Justice Department’s Office of International Affairs and Costa Rican authorities provided assistance.

The case is being handled by Trial Attorney C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section, Assistant U.S. Attorneys Zia M. Faruqui and Laura Crane of the U.S. Attorney’s Office for the District of Columbia, Paralegal Specialist Brian Rickers and Teesha Tobias, and Legal Assistant Jessica McCormick.  Additional assistance has been provided by former Assistant U.S. Attorneys Youli Lee and Kara Traster, and Paralegal Specialist Toni Anne Donato.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

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Author: August 4, 2020

Texas Entrepreneur Charged with Spending COVID Relief Funds on Improper Expenses Including Lamborghini and Strip Club

A Houston, Texas man has been taken into custody on allegations he fraudulently obtained more than $1.6 million in Paycheck Protection Program (PPP) loans, announced Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division and U.S. Attorney Ryan K. Patrick of the Southern District of Texas.  

Lee Price III, 29, spent the money on luxury items, real estate and personal entertainment, according to the complaint unsealed today upon his arrest. He is expected to make his initial appearance before U.S. Magistrate Judge Sam S. Sheldon in Houston today.

Price is charged with making false statements to a financial institution, wire fraud, bank fraud and engaging in unlawful monetary transactions. 

The complaint alleges Price was involved in a scheme to submit fraudulent PPP loan applications to federally insured banks and other lenders. The Small Business Administration (SBA) guarantees the loans for COVID-19 relief through the PPP under the Coronavirus Aid, Relief and Economic Security (CARES) Act. 

Two fraudulent applications received funding, according to the complaint. Price Enterprises Holdings allegedly received more than $900,000, while a loan application listing 713 Construction was approved for over $700,000. The loan applications allegedly asserted both entities each had numerous employees and significant payroll expenses. According to the charges, however, neither entity has employees nor pays wages consistent with the amounts claimed in the loan applications. Further, the individual listed as CEO on the 713 Construction loan application died in April 2020, a month before the application was submitted, according to the complaint.

Price allegedly used the loan proceeds not for payroll expenses, but for lavish personal purchases, such as expending the loan money on a Lamborghini Urus, a Rolex watch and real estate transactions. He also allegedly spent thousands at strip clubs and other Houston night clubs. The complaint further alleges Price used a portion of the loan money to buy a 2020 Ford F-350 pickup truck.

The CARES Act is a federal law enacted March 29. It is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief the CARES Act provides is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.   

A federal criminal complaint is merely an accusation. A defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law. 

The Federal Housing Finance Agency Office of the Inspector General (OIG), SBA-OIG and U.S. Postal Inspection Service – Houston Division conducted the investigation. Trial Attorneys Timothy A. Duree, Senior Attorney Advisor James Alexander and Matthew Grisier are prosecuting the case with the assistance of Assistant U.S. Attorney James McAlister.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

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Author: August 4, 2020

Virginia Man Pleads Guilty to Enticement, Child Pornography Charges

A Virginia man who used an online chat website to engage in sexually explicit conversations with a 12-year-old minor female and later induced the victim to engage in sexually explicit behavior over video chat, pleaded guilty today in U.S. District Court in the Western District of Virginia to a pair of federal charges, announced Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division and U.S. Attorney Thomas T. Cullen for the Western District of Virginia.

Roger Allen Bellini, 30, pleaded guilty today to one count of coercion and enticement and one count of possession of child pornography.  He will be sentenced on Jan. 4, 2021.

According to court documents, Bellini admitted to using an online chat website to communicate with minor females.  The defendant admitted the communications were sexual in nature.  Specifically, Bellini admitted to communicating with a minor via video chat, beginning when she was 12 years old.  He used screen capture software to record his computer screen while he engaged in video chats with the minor.  In these video chats, Bellini induced the minor to expose herself and perform sexually explicit acts. 

The investigation of the case was conducted by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.  Trial Attorney Leslie Fisher of the Criminal Division’s Child and Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Rachel Swartz prosecuted the case for the United States.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.justice.gov/psc.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.  

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Author: August 4, 2020

Attorney General William P. Barr Remarks at White House Roundtable on Housing Assistance Grants for Victims of Human Trafficking, Remarks as Prepared for Delivery

Thank you for being here.  The scourge of human trafficking is the modern-day equivalent of slavery.  Eradicating this horrific crime and helping its victims are top priorities for President Trump’s Administration, including the Department of Justice.  I thank the President for his steadfast commitment to this issue, and I thank Ivanka for her leadership and for hosting us today.  I also thank all the survivors and their advocates here for their courage and determination to end this evil practice.

In late January, a number of us were here for the White House Summit on Human Trafficking.  We noted that this year marks the 20th anniversary of the Trafficking Victims Protection Act, a law that has enabled great progress in this fight.  I promised that the Justice Department would do everything in its power to stop human traffickers and to help survivors.  And today I am pleased to announce an important step in keeping that promise.

The Justice Department is awarding more than 35 million dollars in grants to support housing for victims of human trafficking, the largest-ever federal investment of its kind.  These funds will help 73 organizations in 34 States to fill an urgent need of trafficking victims.  When survivors are liberated from the nightmare of trafficking, they often face a new challenge – they have nowhere to live.  Tragically, the trauma of trafficking can give way to new dangers caused by homelessness and can even result in a re-victimization by predators.

No one should have to endure that heartbreak.  Thanks to the funds awarded today – and to the devoted organizations, including many faith-based organizations, using them – survivors of human trafficking will be able to count on a safe place to stay and a real chance to restart their lives.  The funds will support multiple forms of short-term housing assistance, including helping survivors make rent payments, cover utility bills or security deposits, or pay moving expenses.  The three inspiring organizations represented here today will use their grants to help more than 100 people, and the total number helped across the country will be in the thousands.

These grants, the first-ever federal program dedicated exclusively to providing housing for survivors of human trafficking, are part of approximately 100 million dollars in total grants that the department anticipates awarding this year to combat human trafficking.  Aside from financial support, the department will continue to use the full force of our law enforcement resources to investigate, prosecute, and punish the people behind this cruel and criminal scourge.  I thank all of you for your commitment to this righteous cause, and I look forward to hearing more today.

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Author: August 4, 2020

Department of Justice Awards Over $35 Million to Provide Housing to Victims of Human Trafficking

Today, Attorney General William P. Barr and Advisor to the President Ivanka Trump announced that the Office for Victims of Crime (OVC), a component of the Department of Justice’s Office of Justice Programs (OJP), has awarded $35,104,338 in grant funding to provide safe, stable housing and appropriate services to victims of human trafficking.

“Human trafficking is a barbaric criminal enterprise that subjects its victims to unspeakable cruelty and deprives them of the most basic of human needs, none more essential than a safe place to live,” said Attorney General Barr.  “Throughout this Administration, the Department of Justice has fought aggressively to bring human traffickers to justice and to deliver critical aid to trafficking survivors.  These new resources, announced today, expand on our efforts to offer those who have suffered the shelter and support they need to begin a new and better life.”

“In the midst of the COVID-19 pandemic, combating human trafficking in the U.S. and abroad is critical work.  DOJ’s grant recipients are on the frontlines of this fight, ensuring that survivors across our country are afforded safe and stable housing and empowered with the support and resources they need to rebuild their lives,” said Advisor to the President Ivanka Trump.  “I am incredibly honored to join Attorney General Barr to highlight these organizations and their tireless and vital work.”

The grants will go to 73 organizations to provide six to 24 months of transitional or short-term housing assistance for trafficking victims, including rental, utilities or related expenses, such as security deposits and relocation costs.  The grants will also provide funding for support needed to help victims locate permanent housing, secure employment, as well as occupational training and counseling.

“Human traffickers dangle the threat of homelessness over those they have entrapped, playing a ruthless game of psychological manipulation that victims are never in a position to win,” said OJP Principal Deputy Assistant Attorney General Kathrine T. Sullivan.  “These grants will empower survivors on their path to independence and a life of self-sufficiency and hope.”

OVC works to enhance the nation’s capacity to assist crime victims and to provide leadership in changing attitudes, policies and practices in ways that will promote justice and healing for all victims.  OVC strives to uphold the intent of the Trafficking Victims Protection Act of 2000 and its subsequent authorizations to ensure that all trafficking victims receive support in accessing the services they need.

OVC provides grant funding and training and technical assistance in an effort to develop, expand and strengthen programs for victims of human trafficking.  In 2018, OVC hosted listening sessions and roundtable discussions with stakeholders in the field and launched the Human Trafficking Capacity Building Center.  From July 2018 through June 2019, 118 OVC human trafficking grantees reported serving 8,375 total clients including confirmed trafficking victims and individuals showing strong indicators of trafficking victimization.

Human trafficking offenses are among the most difficult crimes to identify, and the scope of human trafficking victimization may be much greater than the limited data reflect.  A new report issued by the Department’s National Institute of Justice found that the number of human trafficking cases captured in police reports may represent only a fraction of all such cases.  Expanding housing and other services to trafficking victims remains a top Justice Department priority.

For a complete list of individual award amounts and jurisdictions that will receive funding, please visit: https://www.ojp.gov/sites/g/files/xyckuh241/files/media/document/htvictimsfactheet.pdf.

The Office of Justice Programs, directed by Principal Deputy Assistant Attorney General Katharine T. Sullivan, provides federal leadership, grants, training, technical assistance and other resources to improve the nation’s capacity to prevent and reduce crime, assist victims and enhance the rule of law by strengthening the criminal and juvenile justice systems. More information about OJP and its components can be found at www.ojp.gov.

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Author: August 4, 2020

Statement of Assistant Attorney General for National Security John C. Demers on the Public Release of the Department’s Findings with Respect to the 29 FISA Applications that Were the Subject of the March 2020 OIG Preliminary Report

Assistant Attorney General for National Security John C. Demers stated:

“The Department of Justice has completed its review of the 29 FISA applications that were the subject of preliminary findings by the DOJ Inspector General (OIG) in March 2020.  We are pleased that our review of these applications concluded that all contained sufficient basis for probable cause and uncovered only two material errors, neither of which invalidated the authorizations granted by the FISA Court.   These findings, together with the more than 40 corrective actions undertaken by the Federal Bureau of Investigation and the National Security Division, should instill confidence in the FBI’s use of FISA authorities.  We would like to express our appreciation to the OIG for their focus on the Department’s use of its national security authority.  We remain committed to improving the FISA process to ensure that we use these tools consistent with the law and our obligations to the FISA Court.  The ability to surveil and to investigate using FISA authorities remains critical to confronting current national security threats, including election interference, Chinese espionage and terrorism.”      

Background

In March 2020, the OIG issued a Memorandum regarding the preliminary findings from its audit of 29 historical FISA applications.  The audit was designed to determine whether the contents of the FBI’s Woods files supported the factual statements in these applications.  The OIG found deficient documentation in these accuracy (i.e., Woods) files and potential errors.  Specifically, the OIG found that FBI was unable to produce the Woods files for 4 of the 29 applications, and the OIG identified numerous apparent errors or inadequately supported facts in all 25 of the 29 applications for which Woods files could be produced.

The OIG did not determine whether any factual assertions in the applications were inaccurate, materially or otherwise.  In addition, when the OIG found a fact unsupported by a document in the Woods file, the OIG did not give the FBI the opportunity to locate a supporting document for the fact outside the file. 

The Department has reviewed the OIG’s preliminary findings for each application.  Each of these applications was also subject to an independent accuracy review.  The Department was able to resolve many of the potential issues identified by the OIG. The FBI was also able to compile Woods files for the 4 applications where an original Woods file could not be located, and the FBI was able in many instances to locate documentation to support a factual assertion either elsewhere in the Woods file or in other files available to the FBI.  Based on the Department’s findings, of the hundreds of pages of facts contained in the 29 applications audited by the OIG, the Department has identified only one material misstatement and one material omission, neither of which we assess to have invalidated the authorizations granted by the FISC.  These findings have been provided to the FISA Court and were posted publicly today.   

The filing can be found here.

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Author: August 3, 2020

Imperial Pacific International and MCC International Saipan Executives Indicted on Federal Charges

Three executives from Imperial Pacific International (IPI) and MCC International Saipan have been indicted on federal criminal charges, including Racketeer Influenced and Corrupt Organizations Act (RICO) conspiracy, harboring illegal aliens, unlawful employment of aliens, and international promotional money laundering announced Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division and U.S. Attorney Shawn N. Anderson for the Districts of Guam and the Northern Mariana Islands.

On Aug. 1, 2019, a federal grand jury returned a 71-count superseding indictment against Liwen Wu, aka Peter Wu, Jianmin Xu, and Yan Shi.  The charges were unsealed today.  The indictment alleges that these individuals committed criminal acts while holding executive positions with IPI and MCC International Saipan.  The defendants are accused of utilizing criminal labor practices during ongoing construction of the Grand Mariana Casino Hotel and Resort on the island of Saipan.  The defendants are further alleged to have transferred over $24 million into the United States to promote their illegal activity.

All three defendants are foreign nationals who currently reside outside of the United States.  Upon returning to the United States, the individuals will be arrested, arraigned, and brought to trial in federal court.

The case is being investigated by the FBI, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, IRS Criminal Investigation, and the U.S. Department of Labor – Wage & Hour Division.  Leshia Lee-Dixon of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Eric O’Malley are prosecuting the case.

An indictment merely alleges that crimes have been committed.  All defendants are presumed innocent until proven guilty beyond a reasonable doubt.

Anyone with further information regarding this matter is urged to call the FBI’s Saipan Office at 670-322-6934.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

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Author: August 4, 2020

Malware Author Pleads Guilty for Role in Transnational Cybercrime Organization Responsible for more than $568 Million in Losses

An author of malicious computer software and a member of the Infraud Organization pleaded guilty today to RICO conspiracy, announced Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. 

Valerian Chiochiu, aka “Onassis,” “Flagler,” “Socrate,” and “Eclessiastes,” 30, pleaded guilty before U.S. District Court Judge James C. Mahan in the District of Nevada.  Chiochiu is a national of the Republic of Moldova, but resided in the United States during the period of the conspiracy.  His plea came just over a month after the co-founder and administrator of Infraud, Sergey Medvedev of Russia, separately pleaded guilty on June 26.  Sentencing for Chiochiu has been scheduled for Dec. 11.

Infraud was an Internet-based cybercriminal enterprise engaged in the large-scale acquisition, sale, and dissemination of stolen identities, compromised debit and credit cards, personally identifiable information, financial and banking information, computer malware, and other contraband.

“Over the course of seven years, Infraud and its alleged conspirators created a sophisticated cybercriminal racketeering scheme that victimized individuals, merchants, and financial institutions to the tune of over half a billion dollars in losses,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division.  “The Justice Department is committed to unmasking cyber criminals and their criminal organizations that use the internet for fraudulent schemes.”

“HSI and our partners are at the forefront of combating financial crimes and illicit activities spread on the Internet,” said Special Agent in Charge Francisco Burrola for the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Las Vegas Office.  “While criminal operators may continue to grow the reach of their criminal activity, ultimately they do not escape the reach of law enforcement. We continue to investigate, disrupt, and dismantle hidden illegal networks that pose a threat in cyberspace.”

According to the indictment, the Infraud Organization was created in October 2010 by Medvedev and Svyatoslav Bondarenko, aka “Obnon,” “Rector,” and “Helkern,” 34, of Ukraine, to promote and grow interest in the Infraud Organization as the premier destination for “carding” —purchasing retail items with counterfeit or stolen credit card information — on the Internet.  Under the slogan, “In Fraud We Trust,” the organization directed traffic and potential purchasers to the automated vending sites of its members, which served as online conduits to traffic in stolen means of identification, stolen financial and banking information, malware, and other illicit goods.  It also provided an escrow service to facilitate illicit digital currency transactions among its members and employed screening protocols that purported to ensure only high quality vendors of stolen cards, personally identifiable information, and other contraband were permitted to advertise to members.  In March 2017, there were 10,901 registered members of the Infraud Organization.

Bondarenko currently remains a fugitive.  

According to the indictment, Chiochiu provided guidance to other Infraud members on the development, deployment, and use of malware as a means of harvesting stolen data.  As part of his plea agreement, Chiochiu admitted to authoring a strain of malware known to the computer security community as “FastPOS”.

During the course of its seven-year history, the Infraud Organization inflicted approximately $2.2 billion in intended losses, and more than $568 million in actual losses, on a wide swath of financial institutions, merchants, and private individuals, and would have continued to do so for the foreseeable future if left unchecked. 

The investigation was conducted by the Las Vegas Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Henderson, Nevada Police Department.  The U.S. Attorney’s Office for the Central District of California also provided assistance with Chiochiu’s case.  Deputy Chief Kelly Pearson and Trial Attorneys Chad W. McHenry and Alexander Gottfried of the Criminal Division’s Organized Crime and Gang Section are prosecuting the case.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

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Author: July 31, 2020

Three Individuals Charged for Alleged Roles in Twitter Hack

Three individuals have been charged today for their alleged roles in the Twitter hack that occurred on July 15, 2020.

Mason Sheppard, aka “Chaewon,” 19, of Bognor Regis, in the United Kingdom, was charged in a criminal complaint in the Northern District of California with conspiracy to commit wire fraud, conspiracy to commit money laundering, and the intentional access of a protected computer.

Nima Fazeli, aka “Rolex,” 22, of Orlando, Florida, was charged in a criminal complaint in the Northern District of California with aiding and abetting the intentional access of a protected computer.

The third defendant is a juvenile.  With exceptions that do not apply to this case, juvenile proceedings in federal court are sealed to protect the identity of the juvenile.  Pursuant to the Federal Juvenile Delinquency Act, the Justice Department has referred the individual to the State Attorney for the 13th Judicial District in Tampa, Florida.

“The hackers allegedly compromised over 100 social media accounts and scammed both the account users and others who sent money based on their fraudulent solicitations,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division.  “The rapid investigation of this conduct is a testament to the expertise of our investigators, our commitment to responding quickly to cyber attacks, and the close relationships we have built with law enforcement partners throughout the world.”

 “There is a false belief within the criminal hacker community that attacks like the Twitter hack can be perpetrated anonymously and without consequence,” said U.S. Attorney David L. Anderson for the Northern District of California.  “Today’s charging announcement demonstrates that the elation of nefarious hacking into a secure environment for fun or profit will be short-lived.  Criminal conduct over the Internet may feel stealthy to the people who perpetrate it, but there is nothing stealthy about it.  In particular, I want to say to would-be offenders, break the law, and we will find you.”

“Upon opening an investigation into this attack, our investigators worked quickly to determine who was responsible and to locate those individuals,” said San Francisco FBI Special Agent in Charge John F. Bennett. “While investigations into cyber breaches can sometimes take years, our investigators were able to bring these hackers into custody in a matter of weeks. Regardless of how long it takes us to identify hackers, we will follow the evidence to where it leads us and ultimately hold those responsible for cyber intrusions accountable for their actions. Cyber criminals will not find sanctuary behind their keyboards.”

“Weeks ago, one of the world’s most prolific social media platforms came under attack.  Various political leaders, celebrities, and influencers were virtually held hostage as their accounts were hacked,” said Kelly R. Jackson, IRS-Criminal Investigation (IRS-CI) Special Agent in Charge of the Washington D.C. Field Office.  “The public was confused, and everyone wanted answers.  We can now start answering those questions thanks to the work of IRS-CI cyber-crime experts and our law enforcement partners. Washington DC Field Office Cyber Crimes Unit analyzed the blockchain and de-anonymized bitcoin transactions allowing for the identification of two different hackers. This case serves as a great example of how following the money, international collaboration, and public-private partnerships can work to successfully take down a perceived anonymous criminal enterprise. Regardless of the illicit scheme, and whether the proceeds are virtual or tangible, IRS-CI will continue to follow the money and unravel complex financial transactions.”

“Today’s announcement proves that cybercriminals can no longer hide behind perceived global anonymity,” said Thomas Edwards, Special Agent in Charge, U.S. Secret Service, San Francisco Field Office. “The Secret Service remains committed to pursuing those responsible for cyber-enabled fraud and will continue to hold cyber criminals accountable for their actions.  This investigation is a testament to the strong partnerships between the Secret Service, the U.S. Attorney’s Office, the FBI, the IRS, as well as our state, local and international law enforcement partners.”

“Our identities and reputations are sacred. We will continue to aggressively defend and protect individuals, companies, and other entities from new-age cyber-fraud, especially those who scheme to hack, defraud and wreak havoc on U.S. citizens across the country,” said Caroline O’Brien Buster, Special Agent in Charge, U.S. Secret Service, Orlando Field Office. “The Secret Service believes that building trusted partnerships between the private sector and all levels of law enforcement is the proven model for success. I commend the exceptional work conducted by our law enforcement partners and the U.S. Attorney’s Office who worked diligently to hold these defendants accountable.”

As alleged in the complaints, the Twitter attack consisted of a combination of technical breaches and social engineering.  The result of the Twitter hack was the compromise of approximately 130 Twitter accounts pertaining to politicians, celebrities, and musicians.

The hackers are alleged to have created a scam bitcoin account, to have hacked into Twitter VIP accounts, to have sent solicitations from the Twitter VIP accounts with a false promise to double any bitcoin deposits made to the scam account, and then to have stolen the bitcoin that victims deposited into the scam account.  As alleged in the complaints, the scam bitcoin account received more than 400 transfers worth more than $100,000. 

This case is being investigated by the FBI’s San Francisco Division, with assistance from the IRS-Criminal Investigation Cyber Unit; the U.S. Secret Service, San Francisco and Headquarters; the Santa Clara County Sheriff’s Office and their REACT task force and the Florida Department of Law Enforcement.

The case is being prosecuted by Senior Counsel Adrienne Rose of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys William Frentzen and Andrew Dawson of the Northern District of California.

Additional assistance has been provided by the U.S. Attorney’s Office for the Middle District of Florida; the State Attorney for the 13th Judicial District in Tampa, Florida; the Criminal Division’s Office of International Affairs and Organized Crime and Gang Section; the United Kingdom’s Central Authority and National Crime Agency; Chainalysis and Excygent.

The allegations of a criminal complaint are merely an allegation.  All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

U.S. Attorney Anderson’s video statement can be viewed here.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

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Author: July 31, 2020

Statement of the Department of Justice Antitrust Division on the Closing of Its Investigation of London Stock Exchange Group and Refinitiv

Assistant Attorney General Makan Delrahim of the Antitrust Division of the U.S. Department of Justice issued the following statement today in connection with the closing of the division’s investigation into the proposed acquisition of Refinitiv by the London Stock Exchange Group (LSEG):

“After an extensive review of the proposed transaction, the Antitrust Division determined that the combination of LSEG and Refinitiv is unlikely to result in harm to competition or American consumers.”

LSEG, headquartered in London, operates the London Stock Exchange, the Italian stock exchange, Borsa Italiana, and a number of other trading platforms for trading of stocks, other equity-like exchange traded products, bonds and derivatives.  LSEG offers indexes such as the FTSE 100 and Russell 2000, analytical tools, and data solutions through its FTSE Russell business.

Refinitiv, headquartered in New York City, is one of the main providers of financial markets data and infrastructure.  Refinitiv offers consolidated real-time and non-real time data feeds of stocks and other discrete content, and desktop solutions and terminals for financial industry professionals.  It also supplies foreign exchange benchmarks and controls several electronic trading venues in various asset classes.

In August 2019, LSEG and Refinitiv announced that LSEG had reached an agreement to acquire Refinitiv in a transaction valued at approximately $27 billion.  Following that announcement, the Antitrust Division conducted a comprehensive eight-month investigation, during which it reviewed documents, analyzed data, and interviewed industry participants.

In conducting its analysis, the Division considered the vertical relationships between LSEG and Refinitiv where one firm serves as a supplier to the other of needed inputs, as well as the horizontal aspects of the transaction where LSEG and Refinitiv offer competing products. In analyzing these different aspects to the transaction, the Division used both the recently released Vertical Merger Guidelines and the Horizontal Merger Guidelines, issued by the Antitrust Division and the Federal Trade Commission.

When analyzing the vertical aspects of the transaction, the division considered how the proposed transaction could affect the ability and incentives of LSEG and Refinitiv to change the licensing terms for proprietary data feeds used by their rivals to supply products that compete against similar products from LSEG and Refinitiv.  Examples of such data feeds include pricing data for financial instruments, currency benchmark rates, and securities identifiers.

The division’s analysis considered how changes in the licensing of LSEG’s and Refinitiv’s proprietary data feeds could affect competition for financial indexes and financial data products, and found that the proposed transaction is unlikely to significantly lessen competition for those products where rivals rely on LSEG and Refinitiv for inputs.  In many instances, for example, the rivals who purchase products and services from LSEG or Refinitiv also sell products and services back to LSEG and Refinitiv.  The division’s analysis took into account the competitive significance in the United States of LSEG’s and Refinitiv’s products compared to their rivals’ products, and the bargaining relationships these rivals have with LSEG and Refinitiv.  The division’s analysis also considered the possible competitive effects of the proposed transaction on customers in the United States of LSEG, Refinitiv, and their rivals. Because LSEG and Refinitiv’s rivals would maintain significant bargaining leverage that would make post-transaction price increases unlikely, and because any potential increase in the fees of the combined firm would not likely be passed on to customers, the division concluded the vertical aspects of the transaction would not cause a significant lessening of competition.

With respect to the horizontal aspects of the transaction, the division found that in areas where LSEG and Refinitiv offer similar products, such as financial indexes, that the combination of the companies’ products are unlikely to significantly lessen competition.  This analysis was based on a review of LSEG’s and Refinitiv’s products that are similar to each other, an analysis of whether these products actually compete against each other in the United States, and the small changes the transaction would likely cause in post-transaction market concentration for these products based on the companies’ market shares in the United States.

The division considered several theories of harm in its review of the proposed transaction, and concluded that these theories were not supported by the available evidence.  For these and other reasons, the division determined that the proposed transaction is unlikely to substantially harm consumers in the United States and therefore closed its investigation.

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Author: July 31, 2020