- The Washington Times - Thursday, May 24, 2001

Sixty-two persons have been arrested in a major coast-to-coast Internet scheme that defrauded 56,000 people out of more than $117 million, the FBI said yesterday.
The arrests were part of "Operation Cyber Loss," a massive federal and state crackdown that targeted Internet pyramid schemes, phony "Beanie Baby" auctions and other Web scams involving 61 federal, state and local investigations. More than 88 people have been charged so far in the investigation.
"Internet fraud, whether its in the form of securities and investment schemes, online auctions and merchandising schemes, credit- card fraud or identity theft, has been one of the fastest growing and pervasive forms of white-collar crime," said Deputy Attorney General Larry Thompson, who helped announce the arrests.
State and federal charges in the probe include fraud by wire, mail fraud, bank fraud, money laundering and intellectual property rights violations. Investigators have been serving arrest and search warrants in the case over the past 10 days in what Mr. Thompson described as an inquiry "of unprecedented scope against Internet fraud."
The arrests by federal and state law enforcement officers involved suspects from New York to Miami to San Diego. The investigation began based on information gathered at the Internet Fraud Complaint Center, a clearinghouse jointly operated by the FBI and the National White Collar Crime Center that opened last year.
The center, which has reviewed more than 36,000 complaints since it began, receives complaints from consumers and companies on its Web site (www.ifccfbi.gov), analyzes the information to find common threads, and distributes leads to about 1,000 law enforcement agencies and regulators. The center is located in Fairmont, W.Va.
The biggest investigation centered on San Diego, where FBI and Justice Department officials said more than 3,000 investors lost about $50 million over a three-year period involving an Internet service that was never delivered. Thirty-nine persons were indicted in that case, 20 of whom have been arrested.
Other cases involved:
* A series of complaints by consumers in Miami who paid about $300 each to gain access to an Internet shopping mall that did not exist. The FBI, which investigated the case, said that about 46,000 consumers were fooled by the scheme, losing more than $14 million.
* More than 400 people lost about $13 million in a separate scam in which an Internet company lured investigators by guaranteeing they would get a 4 percent return — which never happened.
* Supposed online auctions of Beanie Baby dolls and computer games resulted in the loss of more than $20,000 for 200 people — none of whom received their ordered goods.
Individual losses in the various schemes nationwide ranged from $50 to $5,000, according to FBI and Justice Department officials.
"The old adage that you cant believe everything you read also holds true for what you read on the Internet," said FBI Deputy Director Tom Pickard.
In a statement, Attorney General John Ashcroft urged victims of Internet fraud to report their cases to the West Virginia center.
"Just as neighborhood watch programs keep watch over their neighborhoods and report suspicious activity to law enforcement, Internet users now have a 'cyber-community watch program," he said.


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