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MULTI-BILLION DOLLAR NET BANKING FRAUD UNCOVERED

Source: CNN.com

Posted on April 13, 2001

      An Internet fraud scheme involving fake bank guarantees worth 2.7 billion pounds (US$3.9 billion) has been uncovered by the International Chamber of Commerce, the ICC announced on April 12.

      Some 29 Web sites used in the scam were shut down but the mastermind was still at large, said Jon Merrett, assistant director of the ICC Commercial Crime Bureau and Cybercrime Units which polices all financial and intellectual property rights breaches on the Internet.

      "We believe two people were arrested in Switzerland and two in San Francisco, but we don't think anything came of that as they were not the masterminds," he said.

      The person or persons behind the scam was still at large and could be running other online fraud schemes, Merrett warned.

      The British-based Commercial Crime Bureau was alerted to the false bank guarantees six months ago but believe some victims were conned as early as 1999.

      Since the scheme was unveiled more victims had come forward and the amount involved could be higher than initially thought, Merrett told Reuters.

Thousands of dollars lost

The victims had paid tens of thousands of dollars for the issue of fraudulent bank guarantees that were validated on the scam Web sites, Merrett said.

      To make them seem legitimate, the Web sites appeared as though they were run by an international clearing house for financial securities and a financial information agency.

      One U.S. businessman had lost $70,000 in the scam, but the Commercial Crime Bureau said it was not clear how much had been stolen in total. At least 10 cases had been identified.

      The scam operated in the United States and the Far East but false guarantees had been presented to banks in several countries including the U.K., Merrett said.

Easy to establish

The sites were hosted by an Internet service provider in the United States. "The problem with the Net is that it is not secure because Internet service providers don't run identity checks on their clients," Merrett said.

      "It is very easy to set up an e-mail account and Web page on an ISP offering free Web space and no checks are done on the people setting them up.

      "We wouldn't like to guess how much money is lost through Internet fraud but we are aware of people losing millions in these types of scams."

      If in doubt about the authenticity of a Web site Merrett recommends doing a 'whois' search of the domain name on any of the large search engines. This will reveal who the site is registered to.




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