Online Theft from New Jersey Town Brings Cyber-Scams Focus

March 31, 2010

The signs seem to sprout overnight on telephone poles and along roadsides, offering upward of $500 a week to work from home.

Such solicitations have long been used by scam artists trying to lure desperate souls into sending away cash for jobs that never materialize. But in a growing number of cases, authorities say they serve a more insidious end.

According to the FBI, those work-from-home signs are increasingly being used to recruit “money mules” paid to illegally wire stolen cash overseas. Some believe they work for legitimate companies. But in truth, investigators say the mules are accomplices to crime bosses in Russia, Belarus and elsewhere who hack into United States bank accounts and siphon the coffers of small businesses and local governments.

“Some people just want to feed their family. They are out of work. But they don’t realize what they are doing is illegal,” said Tim Ryan, head of the FBI’s cyber crime unit in Newark.

The FBI is investigating at least three dozen cases in New Jersey that authorities suspect involve money mules, Ryan said. Aside from roadside signs, they are recruited through reputable job-search Web sites like, the agent said.

Yes, the mules really do work from home. And they can actually make money. But they often wind up losing more than they earn and if caught can face up to 20 years in prison for wire-fraud, authorities said.

Authorities say the schemes typically begin with an overseas computer hacker sending an e-mail to the address of, for example, the business administrator for a local school district in New Jersey. The message looks legitimate. But when the administrator opens the attachment, it quietly embeds software on the computer to record every keystroke.

“They may never know it happened,” said Jim Menendez, vice president for global security at CSC, an international technology firm.

Now the hacker can steal the administrator’s password to the school district’s online banking account. He has power to transfer money. But sending it directly to Russia or elsewhere overseas would draw the attention of banking officials. So the hacker needs to send the cash to someone in the United States.

Enter the money mule.

The hacker transfers the money typically less than $10,000 to avoid setting off regulatory red flags to the mule’s bank account. The mule immediately withdrawals the cash, keeps, say, 10 percent, and wires the rest to the hacker overseas.

Hackers have been using mules since the dawn of cyber crime. But they are growing more common, authorities say, as cyber crime swells and a sputtering economy leaves legions of people desperate for work.

Crime bosses, meanwhile, have become increasingly sophisticated at recruiting and manipulating mules, said Robert Siciliano, an internet security consultant. They build professional-looking Web sites, hire middle managers or “mule herders” in the United States and take elaborate steps to convince their unwitting accomplices they work in the shipping or accounts-receivable departments for multinational firms.

“This is very organized. The people who run these operations are reading all the same stuff that fortune 500 CEOs are reading,” Siciliano said.

Last week, Egg Harbor Township officials reported international cyber thieves had stolen $100,000 from a municipal bank account. Officials declined to say whether money mules were involved, but the township’s mayor told reporters the money was transferred in increments under $10,000 to people with no connection to the town.

Some mules realize something is awry after their transaction, said Ryan, the FBI agent. Once that township or local school district realizes money is missing, the bank can usually trace the transfer to the mule, who may be liable for every stolen dime, Ryan said.

Yet not all mules are dupes, the agent said. Some open accounts in a variety of states typically at small banks with less savvy security in an effort to evade investigators, Ryan said.

Relatively few mules have been charged criminally. For one, it is hard to prove criminal intent if someone is genuinely duped into breaking the law. Plus, the strategy of moving cash in increments small enough to slip under banks’ radars also makes them unappealing to prosecutors. They want ringleaders.

But ringleaders of cyber crimes are hard to catch. Mule recruiters hide behind fake Web sites and telephone numbers routed over the internet. The hackers are often overseas. And while investigators may trace a wire transfer to a Western Union office in Moscow or Minsk, it’s often hard to find who actually picked up the cash.

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