Computer fraud

Introduction

            Computer fraud is using a computer to take, alter or gain unlawful use of electronic data of computers or systems. In United States jurisdiction, computer fraud is particularly prescribed by Computer Fraud and Abuse Act. This Act criminalizes all criminal computer-related acts under the federal jurisdiction. Computer fraud the suspected activities such as distributing hoax emails, unauthorized access to a computer, data mining those millions as well as malware, illegal gathering of identification information to use in accessing, use illegally obtained credit cards, stealing of Social Security numbers among others. Many hack computer systems to get large volumes of data for unlawful use. They also send viruses or worms with intent to ruin another party's computer or computer systems. In accomplishing this, criminals use social engineering, viruses, phishing well as DDos attacks as tactics to disrupt service or gain access to victim’s funds for fraud reasons.

AUG. 11, 2015: Nine Charged in the Insider Trading Case Tied to Hackers

            It was a mutual relationship that brought the cyber criminals to the dark reaches of the online world.  Living in their suburban homes in the US,  a nine-man rogue stock trader managed to send overseas hackers their shopping lists of corporate information releases they needed to guard before being made public (Hong, 2015,). The hackers who were working from Ukraine would then forward the how-to videos through email with full instructions to gain access to all pilfered income releases. In summary, the 32 traders together with their expert hackers reaped over $100 million in unlawful proceeds in a complex and brazen scam which is the greatest to match the wizardry of cyber -hacking to traditional insider trading. This was according to the court filings which was made public.  The indictment said that among those men were, Vitally Korchevsky, a hedge proceed manager and a retired Morgan Stanley staff based in one of the Philadelphia’s suburb, benefited    $17 million from illegal profits. This five-year fraud came undone when some federal prosecutors from New Jersey and  Brooklyn in collaboration with  Securities and Exchange Commission’s regulators and supportive law enforcement partners,  contacted multiple arrests,  filed indictments, and a lawsuit against the ever reigning loose business confederates’ network.

            In August 2015, the authorities managed to arrest Korchevsky at his home which is based in Glen Mills, Pa. the other four fraud master-minders were arrested in Georgia and in estates of Brooklyn. Warrants of arrest had been issued and from the arrest, three of them were kinsmen with ties in Ukraine. According to the United States attorney for New Jersey district, Mr. Paul Fishman, the hackers were relentless with a lot of patience. In a particular indictment, federal prosecutors based in New Jersey confirmed that five the hackers unlawfully gained access to companies such as Business Wire as well as PR Newswire for more than five years and defrauded them over 150,000 information releases. The publicly traded corporations were preparing these releases before releasing it to the public. Another victim company whose releases taken before being made public were the Market wired company. The United States attorney for New Jersey district never faulted the wire services as he confirmed that they had worked well in investigations. The illegally acquired news releases gave the fraudulent traders, of which four got charged in the separate indictment which was unsealed by prosecutors in Brooklyn. This was unlawfully having a huge advantage over other traders in the stock market allowing them to trade on information before getting wired. The individuals who used the unlawfully acquired information to trade in the stocks paid hackers a specific fee or a specific percentage of profits gained from fraudulent trading. The authorities confirmed that the illegal traders seeking illegal edges created shopping lists kind of to the hackers for the types of releases they desired and the firms they indented to trade on. The on-mission men got information from over 30 companies, which included, Clorox, Bank of America, Caterpillar as well as Honeywell. Being deliberate actions by traders, the law enforcement authorities asserted that they managed to trade prior the information contained in approximately 800 of the hundreds of thousands of releases they got a sneak peek at (Van Swol,  Braun & Kolb, 2015). This trend indicated a systematic and well-timed strategy to conceal their fraudulent activities. The authorities also confirmed that, in many situations, the men held many conversations through email as well as online messages, boldly discussing their activities. According to the indictment, at  a particular  scenario  in 2012, for instance, one of the accused  wrote in  The Russian language  in an online  live chat message, “I’m now  hacking into  prnewswire.com system .” In a second scenario, one accused   emailed 96 fraudulently acquired news releases to an individual with a heading, in Russian, that read “fresh, new stuff.” The email continued and said, “If he says that he does not understand what this is all about, inform him ‘quarterly report,’

            The indictment said that the authorities took an initiative to monitor some defendants for some years.  After thorough follow-ups in November 2012, the authorities seized a laptop from one of the hackers and on scrutiny; they found approximately 200 nonpublic information releases which were the private release for PR Newswire. Those charged in New Jersey indictment for breaking into t newswire networks included; Arkadiy, 51; Oleksandr, 24; Dubovoy, 28; Ivan Turchynov, 27; and Pavel Dubovoy, 28. Also, Brooklyn prosecutors also charged   Mr. Korchevsky, Khalupsky, 45; Leonid, 47; as well as Alexander 47, who are United States residents (Leukfeldt, 2014). They had personal brokerage accounts in some biggest investment banks in the United States. The banks included Merrill Lynch, JPMorgan Chase as well as Jefferies.  Among them, two were at one time registered with S.E.C., such as Mr. Korchevsky.

The authorities confirmed through court papers that that the illegal independent traders, as well as hackers based abroad, shared login as well as password details for all brokerage accounts they managed. It, therefore, made it easier to trade and at the same time transfer payments to their destined locations. In a statement made by Kelly Currie who is the federal attorney in charge of Brooklyn, that team of networks hackers and traders was an unholy alliance. In a confirmed court report, the authorities said that millions of dollars in those fraudulent trading had was recovered from all bank accounts managed by traders as well as hackers.  Like a full force fight against fraud, authorities went ahead to seize some homes, a boat as well as an apartment complex which they purchased from the proceeds of their fraudulent activities.

Charges and how they demonstrated financial fraud intend

            The charges passed against the men demonstrated many ways through which computer hackers can richly profit from illegally acquired information. Matthew Schwartz, a lawyer at Boies, Schiller & Flexner and a former prosecutor in Manhattan who worked on cases involving digital crime said the crime was motivated to become rich. He asserted that whenever people think of hackers who try to gain from their offense, they usually think of individuals who access and steal bank account details or sell sensitive identifying information.  He said that the reality had exemplified by charges against the team where the hackers managed to gain access sensitive and valuable information and profited off of it in all ways imaginable.

            In a similar case, Manhattan prosecutors filed charges against five men team where some of them played a role in the breach at the JPMorgan Chase, which leads to the loss of customer information for over 83 million accounts (Wolfe, 2015). The authorities asserted that the suspected group intended to those millions of email addresses illegally acquired for hacking to extend stock manipulation plans involving many spam emails to shoot up the prices of suspected worthless stocks. In another charge example, the scheme was as well similar what the court said it happened in 2005 where the S.E.C. charged a team of traders based in Estonia with hacking Business Wire to steal news releases for purposes of informing their intended trades. Therefore hacking or corporate news releases theft remain a computer based strategy for traders looking for illegal edges to use over years. Despite the similarity, uncovered group seemed further tactical when compared the Estonian online hackers since its scheme was broader when compared to anything that had previously been uncovered by enforcement authorities. From the critical analysis, this case is the first of different cases where hackers utilize purloined corporate information to carry out securities fraud.  In another incidence which occurred in 2015, a computer consulting firm Fire Eye confirmed uncovering of a complex team of hackers, called Fin4. The team had specialized in aiming at email networks of huge pharmaceutical as well as financial institutions to access market-sensitive details as well as deals. This revelation was also critical since it outlined in the report that Fire Eye, in California, shared with S.E.C., as well as the Federal Bureau of Investigation. The revelations helped his authorities in pursuing the case.           As a measure, the S.E.C requested companies to give information on information acquired in breaches of their computer- based networks. Further as a lesson, authorities undertook same steps with many huge public relations.  In confirming the this criminal trend, a threat intelligence manager at  Fire Eye, who worked on Fin4 report confirmed similarities as well as differences between approaches the group he had observed used and those handled up federal authorities. He asserted that the targeting overlap in both had deliberate pursue of market-moving information to benefit fiscally in the stock trade.  He also added that the only differences among such groups are the places where the information gets sourced. Therefore despite the differences, the goal in such crimes remains where hackers infiltrate networks and gain private, sensitive information to gain an edge in targeted trades.

Challenges in fighting computer fraud

            Currently, the world continues to experience complex and self-sufficient technology underground economy where data remains an illicit commodity. Stolen financial and personal data used, for instance, to gain access to bank accounts, credit cards, or fraudulently establish new credit lines has huge monetary value. This situation remains a driving force for criminal activities such as phishing, pharming, malware distribution as well as hacking corporate databases. Such crimes get supported by an infrastructure of malicious code writers; web hosts specialists as well as people with the ability to lease networks of compromised computers to commit automated crimes. Despite the value of cybercriminal economy not yet known, recent estimate in global corporate losses stands at around €750 billion each year (Katz, 2013).

            Currently, advances in the communications technologies, as well as the “informatisation" of the world, continues converged as never before. It has created to the industrialization of crime type where commodities, personal data, move so quickly to the extent that the conventional law enforcement cannot manage to keep pace. Computer fraud rates continue increasing with the adoption of Internet. Mobile access to The Internet and continuous broadband internet infrastructure deployment in the, therefore, creates vulnerability levels. Adopting these internet technologies poses potential external as well as internal threats. Additionally, increased data outsourcing data to third parties creates imminent risks to security as well as data protection (Lynn Winmill, Metcalf & Band, 2010).

Conclusion

            With the advent of computer technology, complexity in crime has also increased.  The inability of criminals to victimize from any location has given them a loophole to escape apprehension.  With technology, they manage to carry out crimes overseas and, therefore, making arrests difficult. Since the losses from computer fraud continue to increase, there is a need for authorities to come up with international policies to help address these crimes. Companies should also take precautionary measures to protect their information to avoid data theft which is critical for defrauding purposes. Technology should also innovate ways through which firms can block hackers and attackers as a preventive measure.

References

Hong, C. N. (2015, August 12). Hackers Tapped a Bonanza of Data for Traders, U.S. Says, Wall             Street             Journal (Online). p. 1

Katz, L. (2013): SYMPOSIUM ON CYBERCRIME. Journal of Criminal Law &             Criminology, 103(3), 663-665.

Leukfeldt, E. (2014): Cybercrime and social ties. Trends in Organized Crime, 17(4), 231-249.       Doi:             10.1007/s12117-014-9229-5

Lynn Winmill, J. B., Metcalf, D. L., & Band, M. E. (2010). CYBERCRIME: ISSUES AND        CHALLENGES IN THE           UNITED STATES, Digital Evidence & Electronic    Signature Law Review, 719-34.

Van Swol, L. M., Braun, M. T., & Kolb, M. R. (2015): Deception, Detection, Demeanor, and       Truth Bias in             Face-to-Face and Computer-Mediated Communication. Communication     Research, 42(8), 1116-1142. Doi: 10.1177/0093650213485785

Wolfe, N. A. (2015): Hacking the Anti-Hacking Statute: Using the Computer Fraud and Abuse   Act to Secure Public Data Exclusivity. Journal of International Human Rights, 13(3),       301-315.

Sherry Roberts is the author of this paper. A senior editor at MeldaResearch.Com in college research papers if you need a similar paper you can place your order for order research paper.