Subject: [NEXTEL-1] Fake PayPal, AOL spam operations stopped by FTC, DOJ

From: Marcelrf <[email-masked]>
Date: Wed, 24 Mar 2004 04:51:14 -0500

Fake PayPal, AOL spam operations stopped by FTC, DOJ
The spammer illegally obtained credit card and account information from
hundreds of users

News Story by Todd R. Weiss

MARCH 23, 2004 (COMPUTERWORLD) - A spam e-mail operation that sent out
e-mails falsely claiming to be from PayPal or America Online Inc.,
tricking hundreds of consumers into entering their credit card, banking
and user account information on fake PayPal and AOL Web sites, has been
stopped by the U.S. Department of Justice and the Federal Trade
Commission.

In a joint announcement yesterday, the two agencies said that Zachary
Keith Hill of Houston has been ordered to halt the
identity theft operation, which was the type of scam also known as
phishing, while he awaits sentencing on federal
criminal charges.

Each agency led its own probe into Hill's activities.

In a criminal case brought by the DOJ in U.S. District Court in the
Southern District of Texas, Houston Division, Hill pleaded
guilty last month to charges of using illegally obtained account access
information to buy goods worth more than $1,000
and to a charge of illegally possessing account information for more
than 15 people on his PC.

In a separate civil lawsuit filed by the FTC in December (download PDF),
Hill was charged with false affiliation for claiming
that the e-mail messages he sent were from PayPal, AOL and other
Internet service providers. He was also charged with
making false claims to consumers so they would provide account
information and with one count of unfair use of that
private information and a count of inducing consumers to submit account
information by using deceptive means. The
24-page complaint asked the court to issue an injunction barring Hill
from continuing his operations.

Casey Stavropoulos, a DOJ spokeswoman, said Hill is expected to be
sentenced on the criminal charges on May 18. He
faces a maximum prison term of 10 to 15 years, she said, but he could
get a lesser sentence as a result of his
cooperation with authorities after his arrest. He also faces fines of at
least $200,000 plus restitution.

Hill sent the fake e-mails between March 2001 and February 2003,
according to the DOJ.

Investigators were able to link Hill to the fake messages through e-mail
addresses that were embedded in the HTML code
in the fake Web pages, said Patricia Poss, one of the FTC attorneys
working on the case. The HTML code in the Web
pages directed the information entered by consumers to Hill's e-mail
addresses, Poss said.

The FTC case against Hill remains in litigation, she said. He has agreed
to the preliminary injunction that halted his
operations while both sides work to resolve the case. Hill is connected
to at least $78,000 in purchases or attempted
purchases on new credit card accounts he opened using the stolen
information, the FTC said.

He illegally obtained 471 credit card numbers, 152 bank account and bank
routing numbers and 541 usernames and
passwords for personal Internet access accounts using his fake Web
sites, according to his plea agreement with the
Justice Department.

Under Hill's scam, consumers received e-mails that appeared to come from
AOL or PayPal. The "From" line identified the
sender as "billing center" or "account department" and the "Subject"
line carried warnings such as "AOL Billing Error
Please Read Enclosed Email," or "Please Update Account Information
Urgent!" The messages warned consumers that their
accounts would be canceled if they didn't respond.

A hyperlink in the e-mail pointed to what appeared to be the AOL Billing
Center, with AOL's logo and live links to real AOL
Web pages. But the site was actually Hill's Web site, where he harvested
consumers' names and their mothers' maiden
names as well as their billing addresses, Social Security numbers, dates
of birth, bank account numbers, bank routing
numbers, AOL screen names and passwords.

Hill's PayPal scheme used the PayPal passwords that consumers provided,
allowing him to use their PayPal accounts to
purchase goods and services.

"As the Hill case demonstrates, the government can make a difference
when agencies work together to crack down on
Internet identity theft scams," Assistant Attorney General Christopher
A. Wray of the DOJ's Criminal Division said in a
statement.

Several attempts to reach Hill by telephone were unsuccessful.

Nicholas Graham, a spokesman for Dulles, Va.-based AOL, said the company
applauds the government's prosecution of
the case. "This is a very important issue to us," Graham said.

Amanda Pires, a spokeswoman for San Jose-based PayPal, said the company
believes the case will help deter others
from using similar scams. "It also helps to educate people not to
respond to these fraudulent e-mails," she said.

Assisting in the cases were the FBI's Washington Field Office and the
U.S. attorney for the Eastern District of Virginia's
Computer Hacking and Intellectual Property Squad.

http://www.computerworld.com/printthis/2004/0,4814,91562,00.html
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