Tag Archives: wire fraud

Nigerian National Guilty of Wire Fraud

January 24, 2013blogarrest, counterfeit check, fraud, guilty plea, HSI, ICE, wire fraudAlex Meyerovich

A Nigerian man pleaded guilty in federal court Tuesday, January 15, 2013, to wire fraud. The guilty plea is the result of an investigation conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

Adebowale Ayodeji Owoaje, 31, pleaded guilty to a scheme to defraud individuals who were selling items and applying for jobs on Internet website craigslist. Using various aliases when he was located overseas, Owoaje used email to reach an agreement with the individuals on the sale price of items or terms of employment, including funds for a purported bonus or training materials.

From overseas, Owoaje sent counterfeit cashier’s checks to his co-conspirators in the United States. Based on instructions from Owoaje, a co-conspirator typed amounts on counterfeit cashier’s checks that exceeded the sales price or bonus agreed to by Owaoje and the individuals. The co-conspirator then mailed the counterfeit cashier’s checks to the individuals.

Owoaje informed individuals that a check in the wrong amount was sent to them by “mistake.” He then asked individuals to deposit that check in their bank account and to keep the amount Owoaje owed the individual, plus an additional sum for their trouble. Owoaje instructed individuals to wire the balance of the money via Western Union to a co-conspirator, whom Owoaje falsely represented to individuals as his secretary or shipping agent. Only after wiring this money did individuals learn that the cashier’s checks they received were counterfeit.

“HSI aggressively pursues these scam artists, even when they concoct and perpetrate their schemes from a foreign country with a perceived sense of anonymity and security,” said John P. Kelleghan, special agent in charge of HSI Philadelphia. “This case also serves as a reminder to U.S. citizens that if a business proposition sounds too good to be true, it probably is a scheme. HSI special agents were successful in identifying a manipulative criminal, who is now being held accountable for his crimes.”

Owoaje is scheduled to be sentenced April 15, 2013 and faces up to 80 years in federal prison, a three-year period of supervised release and a fine of up to $1 million.

Chinese National Pleads Guilty to International Cyber-Theft Conspiracy

January 9, 2013blogarrest, criminal copyright infringement, cyber theft, HSI, ICE, IPR Center, National Intellectual Property Rights Coordination Center, pirated software, sentencing, wire fraudAlex Meyerovich

Late Monday, January 7, 2013, a Chinese national pleaded guilty to conspiracy to commit criminal copyright infringement and wire fraud. The individual operated a website used to distribute more than $100 million worth of pirated software around the world, making it one of the most significant cases of copyright infringement ever uncovered – and dismantled – by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

Xiang Li, 36, of Chengdu, China, will be sentenced May 3, 2013, by U.S. District Court Judge Leonard P. Stark. Li faces a maximum sentence of 25 years in prison, a $250,000 fine and three years of supervised release following his prison sentence. The entry of the guilty plea was announced at a press conference held this morning in Wilmington by U.S. Attorney Charles M. Oberly III, District of Delaware and ICE Director John Morton.

“Li mistakenly thought he was safe from the long arm of HSI, hiding halfway around the world in cyberspace anonymity,” said Director Morton. “Fast forward to today, where he is now being held accountable in Delaware for illegally stealing, distributing and ultimately exploiting American ingenuity and creativity at a loss of at least $100 million to U.S. companies. HSI is committed more than ever to protecting American industry and U.S. jobs from criminals like him.”

According to statements made at the plea hearing and documents filed in court, HSI identified Li as the operator of a website located at www.Crack99.com that was advertising thousands of pirated software titles at a fraction of their retail value. The investigation revealed that Li used the Crack 99 website to distribute pirated or cracked software to customers all over the world, including the United States. Software is “cracked” when its digital license files and access control features have been disabled or circumvented.

Through emails sent to customers of his website, Li described himself as being part of “an international organization created to crack” software. In a November 2008 email exchange with a customer, for example, Li stated that he would charge $1,000 to obtain a cracked version of a particular software program. When the customer wrote, “Yes ok tell me who do this.” Li replied, “Experts crack, Chinese people Sorry can not reveal more.”

During the course of the charged conspiracy from April 2008 to June 2011, Li engaged in more than 500 transactions, in which he distributed approximately 550 different copyrighted software titles to at least 325 purchasers located in at least 28 states and more than 60 foreign countries. These software products were owned by approximately 200 different manufacturers and were worth more than $100 million. The software is used in a wide range of applications including defense, engineering, manufacturing, space exploration, aerospace simulation and design, mathematics, and explosive simulation.

More than one-third of the unlawful purchases were made by individuals within the United States, including small business owners, government contractors, students, inventors and engineers. Some of Li’s biggest American customers held significant engineering positions with government agencies and government contractors. For instance, Li sold 12 cracked software programs worth more than $1.2 million to Cosburn Wedderburn, who was then a NASA electronics engineer working at NASA’s Goddard Space Flight Center, in Greenbelt, Md. Li also sold 10 cracked software programs worth more than $600,000 to Dr. Wronald Best, who held the position of chief scientist at a Kentucky-based government contractor that services the U.S. and foreign militaries and law enforcement with a variety of applications such as radio transmissions, radar usage, microwave technology and vacuum tubes used in military helicopters. Both Wedderburn and Best have pleaded guilty to conspiracy to commit criminal copyright infringement and are awaiting sentencing in the District of Delaware.

Between January 2010 and June 2011, undercover HSI special agents made a series of purchases of pirated software worth hundreds of thousands of dollars from Li’s Crack 99 website. The investigation culminated in a face-to-face meeting between Li and undercover HSI special agents on the Island of Saipan in June 2011. Li agreed to travel from China to Saipan to deliver pirated software, design packaging and 20 gigabytes of proprietary data from a U.S. software company to undercover HSI special agents posing as U.S. businessmen. In addition, Li and the undercover HSI special agents were meeting to discuss a plan to distribute pirated software to small businesses in the United States. The undercover HSI special agents arrested Li June 7, 2011, after he delivered the stolen intellectual property to them at a Saipan hotel. Li was transported to the District of Delaware, where he has remained in custody since June 2011.

One of the companies victimized by the software piracy scheme stated, “Circumventing our commercial aerospace and defense software license mechanisms not only harms the competitiveness of our company, but also U.S. national security interests. In addition to the revenue lost, we spend significant legal resources obtaining patents and trademarks to protect our intellectual property. We also invest a lot of energy administering software license agreements and product-based, end-user licenses, which are key components of our U.S. export control compliance and customer support programs.”

HSI-led National Intellectual Property Rights Coordination Center (IPR Center)

As the largest investigative arm of the Department of Homeland Security, HSI plays a leading role in targeting criminal organizations responsible for producing, smuggling and distributing counterfeit products. HSI focuses not only on keeping counterfeit products off our streets, but also on dismantling the criminal organizations behind such illicit activity.

HSI manages the IPR Center in Washington. The IPR Center is one of the U.S. government’s key weapons in the fight against criminal counterfeiting and piracy. As a task force, the IPR Center uses the expertise of its 21 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public’s health and safety, the U.S. economy and the war fighters.

Assistant U.S. Attorneys David L. Hall and Edward J. McAndrew, District of Delaware, are prosecuting this case on behalf of the U.S. government.

Colorado Company Executives Guilty of Fraud and International Environmental Crimes

January 4, 2013blogColorado, electronic waste, environmental crimes, EPA, HSI, ICE, international environmental crimes, mail fraud, obstruction of justice, smuggling, wire fraudAlex Meyerovich

A Denver-area environmental waste-recycling company and two of its executives were convicted Friday, December 21, 2012, of multiple counts of mail and wire fraud, obstruction and environmental crimes related to illegally disposing electronic waste and smuggling.

This conviction announcement was made by U.S. Attorney John Walsh, District of Colorado; Special Agent in Charge Kumar Kibble with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Denver; and Special Agent in Charge Jeffrey Martinez of the Environmental Protection Agency’s (EPA) Criminal Investigation Division.

Following an 11-day trial, the jury deliberated for two-and-a-half days before reaching their verdicts against Executive Recycling Inc. (a corporation), Brandon Richter, 38, of Highlands Ranch, Colo., who was the owner and chief executive officer, and Tor Olson, 37, of Parker, Colo., former vice president of operations.

Executive Recycling Inc., as a corporation, Brandon Richter and Tor Olson were indicted by a federal grand jury in Denver Sept. 15, 2011. The jury trial before U.S. District Court Judge William J. Martinez began Dec. 3, 2012. The jury reached their verdicts Dec. 21. The defendants are scheduled to be sentenced by Judge Martinez in April 2013.

“The improper disposal of electronic waste not only hurts our environment, it also leaves a legacy of environmental hazards for our children and our children’s children,” said U.S. Attorney John Walsh. “The trial team, including our prosecutors and staff, ICE HSI and the EPA, deserves the thanks of the public for their outstanding work during this ground-breaking environmental investigation that also involved a case of first impression in export control and complex criminal trial.”

“This criminal conviction demonstrates that there are no shortcuts to following U.S. export laws,” said Kumar Kibble, special agent in charge of HSI Denver. “For years this company also deceived the public by falsely advertising an environmentally friendly U.S. recycling business plan. Instead, it regularly exported obsolete and discarded electronic equipment with toxic materials to third-world countries, and took actions to illegally hide these practices from government officials.”

“The United States is a world leader in the manufacture and consumption of electronics and we have a responsibility to ensure they are disposed of properly,” said Jeffrey Martinez, EPA’s special agent in charge of EPA’s criminal enforcement program in Colorado. “Many of these worn-out electronics are illegally exported to developing countries where people risk their health and the environment to retrieve the valuable materials left in them. Today’s guilty verdicts demonstrate that the American people will not tolerate the flagrant violation of laws that harm the environment and people of the developing world.”

According to the indictment, as well as the facts presented at trial, Executive Recycling Inc. was an electronic waste-recycling business located in Englewood, Colo., with affiliated locations in Utah and Nebraska. The company collected electronic waste from private households, businesses and government entities. Executive Recycling Inc. was registered with the Colorado Department of Public Health and Environment as a “Large Quantity Handler of Universal Waste.” Richter, as owner and CEO, was responsible for supervising all aspects of the company. Olson, the vice president of operations, was responsible for running day-to-day operations.

A significant portion of electronic waste collected by the defendants were cathode ray tubes (CRTs). CRTs are the glass video display components of an electronic device, usually a computer or television monitor, and are known to contain lead. The defendants exported electronic waste, including CRTs, to foreign countries, including the People’s Republic of China. The defendants regularly negotiated the sale of electronic waste to brokers who represented foreign buyers or who sold the electronic waste overseas. The foreign buyers often paid the defendants directly. To transport the electronic waste, the defendants used shipping cargo containers which were loaded at the company’s facility. The containers were then transported by rail to domestic ports for export overseas.

Executive Recycling Inc. appeared as the exporter of record in over 300 exports from the United States between 2005 and 2008. About 160 of these exported cargo containers contained a total of more than 100,000 CRTs.

Between February 2005 and continuing through January 2009, the defendants knowingly devised and intended to devise a scheme to defraud various business and government entities who wanted to dispose of their electronic waste, and to obtain these business and government entities’ money under false and fraudulent pretenses. The defendants represented themselves on a website to have “extensive knowledge of current EPA requirements.” The defendants falsely advertised to customers that they would dispose of electronic waste in compliance with all local, state and federal laws and regulations. It was part of the scheme that the defendants falsely represented that they would dispose of all electronic waste, whether hazardous or not, in an environmentally friendly manner. Specifically, the defendants falsely represented that the defendant company recycled electronic waste “properly, right here in the U.S.” They also stated that they would not send the electronic waste overseas.

The defendants’ misrepresentation induced customers to enter into contracts or agreements with the defendants for electronic waste disposal. Each victim paid the defendants to recycle their electronic waste in accordance with the representations made by the defendants. Contrary to their representations, the defendants sold the electronic waste they received from customers to brokers for export overseas to the People’s Republic of China and other countries.

Executive Recycling Inc. as a corporation faces a $500,000 fine per count for seven wire fraud counts, or twice the gross gain or loss. The corporation faces a conviction for one count of failure to file notification of intent to export hazardous waste, which carries a penalty of a $50,000 fine per day of violation, or twice the gross gain or loss. The corporation also faces one count of exporting contrary to law, which carries a $500,000 fine, or twice the gross gain or loss.