- The Washington Times - Monday, February 25, 2008


The case of a Michigan woman charged with identity theft has exposed of a huge series of credit card scams being run from the former Soviet bloc that have cost consumers and businesses hundreds of millions of dollars.

The state attorney general’s office said Krystal Owens would go on trial today on three counts of identity theft and one of conspiring to commit identity theft.

But one independent investigator who has followed the case said 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 press release announcing the charges named her co-conspirator as Tomas Lasinkas and identified his company and two Web sites that purportedly used in the scam. Officials say the scheme involved making small, bogus charges to thousands of credit cards, whose numbers had been stolen.

Mr. Lasinkas and Miss Owens are accused of making the $12.95 charges to hundreds of cards daily, bilking more than $200,000 out of the scheme in six months — money that Miss Owens’ transferred to a bank account in Bulgaria.

The name of Mr. 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 by an independent investigator using public information.

The investigator, an IT consultant who posts on the Internet forum Broadbandreports .com using the name MGD, shared the results of his investigation on condition that 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 (Mr. 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 that 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. They are made to hundreds of credit cards whose numbers have been stolen or compromised in some other way.

MGD, who has been tracking for 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 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.

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.

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