Analysis: Detroit trial shows cyber-scam

WASHINGTON, Feb. 25 (UPI) -- The case of a Michigan woman charged with identity theft has lifted a small corner of the veil over a huge series of credit-card scams, run from the former Soviet bloc, that have cost consumers and the card industry hundreds of millions of dollars.

The state attorney general's office told United Press International that Krystal Owens would go on trial Monday on three counts of identity theft and one of conspiring to commit identity theft.

But one independent investigator who has followed the case told UPI that publicly available details of the crime match a series of "identical" frauds that are netting conspirators more than $10 million a month.

The Michigan attorney general's office declined to comment further in advance of the trial, but a statement announcing the charges named her co-conspirator as Tomas Lasinkas, and identified his company and two Web sites they allegedly used to run the scam, which involved making small bogus charges to thousands of credit cards, whose numbers had been stolen.

Lasinkas and Owens allegedly made the $12.95 charges to hundreds of cards daily, bilking more than $200,000 out of the scheme in six months, money that Owens transferred to a bank account in Bulgaria.

The name of Lasinkas' company, the Web templates used to charge the cards and the destination of the payments to Bulgaria match those used in a series of dozens of identical fraud schemes, identified and tracked in meticulous, forensic detail by an independent investigator using public information like company and Internet domain name registration records, along with victims' accounts and interviews.

The investigator, an IT consultant who posts on the Internet forum Broadbandreports.com using the name MGD and tracks cyber-fraudsters in his spare time, shared the results of his investigation with UPI on condition his real name was not revealed, saying he feared retaliation from the scammers.

MGD said the scam had been running in various permutations for at least four years. It involves the recruitment of a U.S. "mule" by a marketing Web site (Lasinkas' was based in Lithuania), or e-mail. The mule, told that the scam is a genuine marketing program, is instructed to set up a U.S. company, and a merchant account for it, which allows credit-card payments to be processed from a Web site.

"The mule is the key," he said, pointing out that a U.S. taxpayer ID number is needed to open the account and banks will require an ID check from a real person before the funds can be wired abroad.

The mule is told to keep a percentage of the charges as a fee, and wire the remainder of the proceeds to Inowest Enterprises Inc. at the Bulgarian bank.

But the payments collected by the Web site are bogus, said MGD, made to huge numbers of credit cards whose numbers have been stolen or compromised in some other way. The scam relies on the fact that many card holders do not check their statements carefully enough to notice the bogus charges, and those who do and contact the Web site receive a prompt refund.

This is done, said MGD, to avoid the $20 so-called charge-back fee that credit card companies will levy on the fake Web site if the customer complains to their card issuer.

MGD, who has been tracking the scam for more than two years and has contacted "seven or eight" mules, says that at any one time he is aware of "probably 30 sites active, each charging up to $40,000 a month."

MGD says that the scammers deliberately set out to recruit mules with "zero knowledge of how e-commerce or the Internet works."

He characterized the mules he had traced as "naive dupes."

"They should be charged with stupidity," he said.

"They don't really have a clue," he said, adding that most of the mules had shut down the accounts they set up once he explained the scam to them, and several had cooperated with his efforts to track the scammers, passing him details of the account to which the funds are wired, and sharing with him the instructions and contracts the scammers had sent them, and other e-mail communication. "They are not career criminals," he said.

MGD said one mule had cooperated to the extent of holding $20,000 worth of funds from the scam in the company account, to see if Lasinkas could be lured out into the open to collect them. The effort failed.

"Anyone who will walk away from $20,000 is obviously making a lot more than that," he said.

MGD said he had "informed the appropriate authorities" but declined to comment further. Neither Owens nor her lawyer could be reached Sunday for comment. The FBI has refused several requests to discuss the matter, saying it is bureau policy not to comment on any possible pending investigations.

MGD said he "would bet any amount of money that there is no real person called Lasinkas," pointing out that, after Owens' arrested and charging in July last year, the scammers changed their arrangements, routing the Inowest funds via a bank in Bishkek, Kyrgyzstan.

He said the scammers had recently resumed using the Bulgarian bank, but with a different payee, Midtown Intergroup Ltd.

"All the money" from the schemes run by the mules he had contacted "is going to the same place," he said.