Federal Investigation Nets 100 in Phishing Scheme

Authorities in the United States and Egypt have charged 100 people with participating in a sophisticated phishing ring authorities say defrauded two banks in the United States.

Early today, police in cities across the United States arrested 33 of the 53 suspects named in a federal indictment in Los Angeles last week. Overseas, Egyptian authorities charged another 47 defendants for participating in the scheme.

The charges were the result of a two-year probe known as Operation Phish Phry, which started when FBI agents working with United Statesfinancial institutions began working to identify and disrupt white collar criminals targeting the financial infrastructure in the United States. Using intelligence developed during the initiative, the FBI partnered with Egyptian law enforcement to investigate multiple suspects based in Egypt. By the time it was over, the effort resulted in the largest cyber-crime investigation to date in the United States, FBI officials said.

“This international phishing ring had a significant impact on two banks and caused huge headaches for hundreds, perhaps thousands, of bank customers,” said Acting United States Attorney George S. Cardona, in a statement. “Organized, international criminal rings can only be confronted by an organized response by law enforcement across international borders, which we have seen in this case.”

According to the indictment, Egyptian-based attackers phished bank credentials and used them to break into the victims’ accounts. Once that was done, the attackers in Egyptcommunicated via telephone, text messages and Internet chats with their counterparts in the United Statesto coordinate the online transfer of funds from the compromised accounts to newly created fraudulent accounts.

The United Statespart of the ring was allegedly directed by Californiaresidents Kenneth Joseph Lucas, Nichole Michelle Merzi and Jonathan Preston Clark. The trio directed associates to recruit “runners” to set up bank accounts where the stolen funds could be transferred and withdrawn. A portion of the illegally obtained funds withdrawn were then transferred to the individuals operating in Egyptthrough wire services.

The 51-count indictment accuses all of the defendants with conspiracy to commit wire fraud and bank fraud. Some of the defendants are also charged with aggravated identity theft, conspiracy to commit computer fraud and domestic and international money laundering.

"The sophistication with which Phish Phry defendants operated represents an evolving and troubling paradigm in the way identity theft is now committed," said Keith Bolcar, acting Assistant Director In Charge of the FBI in Los Angeles, in a statement. "Criminally savvy groups recruit here and abroad to pool tactics and skills necessary to commit organized theft facilitated by the computer, including hacking, fraud and identity theft, with a common greed and shared willingness to victimize Americans."