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12/12/2013
10:20 AM
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Cybercrime Milestone: Guilty Verdict In RICO Case

Prosecutors use law designed to take down mobsters to fight online crime.

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A law crafted to take down organized crime rings has been used for the first time in a cybercrime case that's resulted in a guilty verdict.

The Racketeer Influenced and Corrupt Organizations (RICO) Act was designed to allow prosecutors to tackle mobsters. But last week, a federal jury in Las Vegas convicted David Ray Camez (aka "Bad Man"), 22, on two RICO charges related to participating in -- and conspiring to participate in -- a racketeer-influenced corrupt organization. That organization allegedly ran a "carder" site, referring to the buying and selling of fake IDs or counterfeit credit cards, named "Carder.su."

Prosecutors have said that it's the first time that the RICO Act has been used in a cybercrime case that resulted in a guilty verdict. But why was it used? "RICO gets you certain sentencing enhancements, certain statute of limitations provisions, certain remedies -- like forfeiture," attorney Mark Rasch, a former federal computer crime prosecutor based in Bethesda, Md., said in a phone interview. "That's really why they use RICO in these website cases, so they can seize and forfeit the website and all the data in it."

Prosecutors will also file RICO charges against a suspect to try and make them plead guilty, rather than risking having a jury convict them of RICO charges, which can trigger stiff sentencing guidelines. "That's why prosecutors like the RICO statute, and usually that's the hammer they use to get people to plead, because they're so afraid of a RICO sentence," said Ifrah Law white collar crime attorney David B. Deitch, speaking by phone.

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On the other hand, "just because you're charged with RICO doesn't mean you have to plea to RICO," said Rasch.

Prosecutors accused Camez of participating in a Russian-run criminal enterprise that lead to $50 million in losses. "It is difficult to fathom the enormity and complexity of the Carder.su racketeering organization and its far-reaching tentacles across international borders," US Attorney Daniel G. Bogden said in a statement.

The jury in Camez's case reached a guilty verdict in less than two hours. He's due to be sentenced in April 2014, and faces up to up to 40 years in prison and a fine of up to $250,000. According to his attorney, Cemez is already serving a seven-year sentence in Arizona on related charges, reported the Las Vegas Review-Journal.

Camez was arrested in March 2012 -- as were 18 other people -- by US Secret Service and US Immigration and Customs Enforcement's Homeland Security Investigations agents, as part of Operation "Open Market," which authorities said was based in Las Vegas. Ultimately, the Department of Justice indicted 55 people with racketeering, conspiracy, and producing and trafficking in false identification documents and access device cards. Camez's case was the first to go to trial, which began last month. To date, eight other defendants have pleaded guilty, about a dozen have related trials scheduled for February 2014, and many of the others are fugitives.

The Operation Open Market indictments and arrests resulted from a four-year probe that began in March 2007 into the Carder.su forum. (The .su domain -- for Soviet Union -- was launched in 1990, one year before the country was formally dissolved. More recently, the domain has been adopted for use by many botnet administrators.)

"The probe revealed members of the ring, known as 'carders,' were involved in large-scale trafficking of compromised credit card account data and counterfeit credit cards, as well as money laundering, narcotics trafficking and various types of computer crime," according to a Department of Justice statement. "The organization operated an Internet Web portal, called a forum, where members could purchase the illicitly obtained data and share knowledge of various fraud schemes. A second forum was created to vet incoming new members."

As of July 2011, the group's forums -- mostly hosted by sites located inside Russia or former Soviet satellite states -- allegedly sported more than 5,500 members.

As part of the probe, an undercover Secret Service managed to infiltrate Carder.su and sell fake IDs, using the nickname "Celtic," reported Wired. Through what was billed as "Celtic's Novelty I.D. Service," the Secret Service sting operation sold fake driver's licenses for 13 states to approximately 100 criminals. Some of these IDs appeared to use genuine Nevada state DMV laminate, although a DMV spokesman told Wired that it hadn't given them to the Secret Service.

According to court documents, in 2009 and 2010, Camez -- using both "Bad Man" and "doctorsex" as his online handles -- purchased multiple counterfeit Nevada and Arizona driver's licenses from "Celtic." Authorities said they also intercepted fake credit and gift cards that had been shipped by Camez.

Authorities said that when they searched Camez's home in May 2010, agents recovered counterfeit credit cards, related manufacturing equipment, as well as counterfeit identification documents and US currency, and that a search of Camez's computer found stolen identity data.

Mathew Schwartz is a freelance writer, editor, and photographer, as well the InformationWeek information security reporter.

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Mathew
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Mathew,
User Rank: Apprentice
12/13/2013 | 5:18:32 AM
Re: more RICO prosecutions?
Great question, and I'm following that up. This case prompts two bigger questions: Is the use of RICO appropriate for taking down people who -- for example in this case -- were smaller players? It was successfully used here, obviously, for Carder.su, which functioned like an eBay for stolen IDs. That means the government has been able to indict everyone to which it successfully sold fake IDs via Carder.su., thanks to its sting operation. Notably, however, the government failed to touch the actual Carder.su admins, who according to some reports are in Russia.

The key part of this RICO case hinges on an undercover Secret Service agent, "Celtic," selling Carder.su users fake IDs. Together with information gathered from the website (and we don't know to what extent the government may have infiltrated the site, beyond Celtic's storefront), the government was able to build its case.

Trying to apply RICO to a site of the Silk Road variety, however, would arguably be more difficult. The ATF's "Fast and Furious" guns sting operation got into hot water because the ATF lost track of the guns it was selling. Likewise, if the government tried to take down all of the users of a "darknet" narcotics-selling site, any undercover agent would need to appear to be trafficking in the real thing. Fake IDs, of course, aren't as much of a liability.

Long answer short: I'm not a lawyer, but according to ones I've spoken with, it looks like for this particular case, the stars lined up. In general, however, successfully applying RICO is -- and should remain -- tough, given the relatively harsh prison time and fines that can result.
Mathew
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Mathew,
User Rank: Apprentice
12/13/2013 | 5:07:39 AM
Re: In the US Grand Jury don't convect anyone
Thanks for the catch. Slip of the tongue. We'll get that fixed.
jsimpson208
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jsimpson208,
User Rank: Apprentice
12/12/2013 | 3:44:55 PM
In the US Grand Jury don't convect anyone
Grand Juries indite people they don't convect them.  They also don't find someone guilty.  The grand jury indites someone, then there is a trial, then the petite jury determains thier guilt or innocence.
Laurianne
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Laurianne,
User Rank: Apprentice
12/12/2013 | 1:34:32 PM
more RICO prosecutions?
Mat, do you think we'll see RICO used to go after more cybercrime?
jries921
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jries921,
User Rank: Apprentice
12/12/2013 | 1:25:36 PM
In this case, it's probably appropriate
A document forging racket is definitely a racket.  The statute can be abused, and sometimes has been to punish what amounts to seditious extremism or non-profit mischief; but for-profit criminal businesses were what the statute was designed to deter.

 
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