The U.S. Justice Department has charged a Russian national living in New York City for his alleged role in a ring that allegedly stole roughly $1 million by hacking into retail brokerage accounts and executing sham trades.
Petr Murmylyuk, also known as “Dmitry Tokar,” 31, of Brooklyn, N.Y., is charged with one count of conspiracy to commit wire fraud, as well as unauthorized access to computers, and securities fraud. The U.S. Securities and Exchange Commission is also filing a parallel civil action.
Beginning in late 2010, Murmylyuk worked with others to steal from online trading accounts at Scottrade, E*Trade, Fidelity, Schwab and other brokerage firms. Members of the ring first gained unauthorized access to the online accounts and changed the phone numbers and email addresses on file to prevent notice of unauthorized trading from going to the victims.
Once the hackers controlled the accounts, they used stolen identities to open additional accounts at other brokerage houses. They then caused the victims’ accounts to make unprofitable and illogical securities trades with the new accounts that benefitted the hackers.
One version of the fraud involved causing the victims’ accounts to sell options contracts to the accounts, then to purchase the same contracts back minutes later for up to nine times the price.
In another version of the fraud, they used the accounts to offer short sales of securities at prices well over market price and to force the victim accounts to make irrational purchases. (A short sale is a sale of stock that an investor does not own, but rather borrows from a stock lender and must eventually return.)
Murmylyuk and a conspirator recruited foreign nationals visiting, studying, and living in the United States – including Russian nationals and Houston residents Anton Mezentsev, Galina Korelina, Mikhail Shatov and others – to open bank accounts into which illegal proceeds could be deposited. Murmylyuk and the conspirator then caused the proceeds of the sham trades to be transferred from the brokerage accounts into the bank accounts, where the stolen money could be withdrawn.
Fidelity, Scottrade, E*Trade, and Schwab have reported combined losses to date of approximately $1 million as a result of the fraudulent schemes.
Murmylyuk is also accused of placing a telephone call to Trade Station Securities in which he claimed to be “Dmitry Tokar,” through whose brokerage account the ring placed approximately $200,000 in fraudulent securities trades. Murmylyuk was arrested in Brooklyn on November 3, 2011, in possession of a laptop that evidenced the fraud.
Mezentsev, Korelina and Shatov were previously charged in the District of New Jersey and convicted of conspiracy to commit wire fraud based on their agreement to receive stolen money in the accounts in their names. United States District Judge Esther Salas sentenced Mezentsev, Korelina, and Shatov to 27 months, 14 months, and 14 months in prison, respectively, earlier this year.
If convicted, Murmylyuk faces a maximum potential penalty of five years in prison and a $250,000 fine.
Meanwhile, Murmylyuk, who has been incarcerated at Otis Bantum Correctional Center in East Elmhurst since his November 3 arrest, also faces an indictment by the Manhattan District Attorney for submitting phony tax returns in the names of hundreds of victims to the Internal Revenue Service (“IRS”) to steal their tax refunds.
The defendant is accused of stealing the personal identifying information of more than 300 people by creating a fake job placement website, and falsifying wage information on the false tax returns to generate the refunds.
In that case, he faces nearly 80 felony charges, including 25 counts of criminal trespass and 25 counts of identity theft.