A Russian national living in Brooklyn has been charged with computer and hacking crimes totaling $1.45 million stolen from retail stock brokerages and state or federal taxpayer coffers.
Petr Murmylyuk, 31, was the ringleader of a gang that hacked into online brokerage accounts and used them to transact money-losing trades, according to a criminal complaint filed in US District Court in New Jersey. The ring then used sham stock trading accounts and bank accounts to take advantage of those losses.
In some cases, the compromised brokerage accounts were used to short sell shares of thinly traded securities for prices that were higher than the selling prices. Short sales are sales of shares that the investor borrows in the expectation they will drop in price by the time they are paid back. By shorting them at a price higher than the current trading price, the transactions caused instant losses to the compromised accounts that made them. Minutes later, Murmylyuk would allegedly cover the short position by purchasing the shares at a price that was midway between the short sale price and the trading price, a maneuver immediately generating a profit.
The compromised accounts were administered by Fidelity Investments, Scottrade, E*Trade, and Charles Schwab. The companies collectively sustained more than $1 million in losses covering the theft, court papers allege. Other companies also affected included OptionsHouse and Trade Station Securities. In addition to criminal charges of fraud conspiracy, unauthorized access to computers, and securities fraud filed by the US Attorney’s office in New Jersey, the Securities and Exchange Commission has filed a civil lawsuit against Murmylyuk.
The Manhattan District Attorney’s office has also charged Murmylyuk with using a sham jobs placement website to steal the identities of more than 300 people, using them to generate more than $450,000 in fraudulent tax refunds. Because many of the people using the www.jobcentral2.net site were unemployed, they were less likely to have reported earned income, allowing Murmylyuk to file tax returns in their names without arousing suspicion.
Murmylyuk allegedly used Russian-language social networking sites to recruit students from Kazakhstan to act as mules to launder the fraudulently obtained funds. Several of them returned to their native country shortly after setting up bank accounts, and have been charged in absentia. If convicted of the federal charges, he faces a maximum of five years in prison and a $250,000 fine. In New York, he has been charged with computer trespassing, first-degree identity theft, and money laundering among other offenses.
Russian national charged with $1.4 million hacking scam