Third Suspect Arrested In U.S. Stock Swindle Involving Israelis

Russian authorities have arrested an American citizen suspected of involvement in an Israeli scheme to run shares in the United States, and hack the databases of JP Morgan and other financial institutions.

Earlier this month, the Jerusalem District Court allowed the extradition of two other suspects in the case to the United States.

According to the Russian media, Joshua Samuel Aaron, 32, was arrested last Wednesday in Moscow, thanks to a collaboration between the Russian police and Interpol.

Aaron had lived in Israel before seeking to evade charges by fleeing to Russia.

He is wanted by the FBI and U.S. Secret Service for allegedly conspiring to commit hacking and actually hacking (“a scheme to hack major American companies in order to acquire customer contact information in order to obtain the client lists of major American companies,” the FBI writes), conspiring to commit securities fraud and wire fraud, aggravated identity theft and conspiracy to launder money.

According to charges filed against the three last year, they allegedly stole contact information for more than 100 million clients of major American financial institutions, including Scottrade and E*Trade.

The scheme to run shares began with setting up shell companies, buying shares through them and then disseminating millions of fabricated messages through email, in order to boost the shares’ value.

The FBI says that Aaron was the “face” of the sting, using the alias “Mike Shields” as well as falsified documentation and national security information, and was the one who created the connection between his friends and the equity trading companies.

Once they had inflated a stock’s share price and trading volume by the emailed promotional campaign, “members of the conspiracy, including Aaron, began dumping, or selling, their shares of the stock in a coordinated fashion, often resulting in huge profits to members of the conspiracy,” the FBI writes.

Then the alleged conspirators would launder the money through a Cypriot bank and other shell companies.

The evidence against them includes statements by states’ witnesses, email and chat correspondence, including emails to banks and brokers about opening accounts based on false (or stolen) names and documentation; printouts of deals in securities and from brokers that reveal unusual trading patterns in shares; and more.

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