Crime Ring that Resold Apple Products Faces Indictment

By Carrie Schmelkin February 03, 2011

Government agents had a busy first week of February, rounding up 27 individuals located in Brooklyn who were believed to be part of a crime ring that was selling Apple products in criminally underground and stashing away $300,000 in cash.

New York prosecutors indicted almost three dozen people on Wednesday, after conducting raids on February 1 that resulted in the seizing of $300,000 in cash, three firearms and ammunition as well as equipment to make fake credit cards, according to a press release from the Manhattan District Attorney's Office.

The gang, which referred to itself as “S3,” is a credit card forgery and identity theft ring based in Brooklyn that put together hundreds of bank accounts and fraudulently purchased Apple products from stores around the country to resell for profit.

Apple products have been sweeping customer sales and Apple recently reported that it had a record-breaking first quarter revenue and earnings of $6 billion.  Success with the iPhone and iPads has helped Apple remain at the forefront of consumer gadgets, according to the company.

These products, however, also piqued the interest of S3 as the gang fashioned fake credit cards to purchase Apple products, including the iPod and iPad, to resell for profit.

“This case demonstrates the dangers of organized computer crime,” said District Attorney Vance in the release. “Today, we have effectively dismantled a significant criminal operation that preyed upon innocent victims around the world. By working with our partners in law enforcement, we will continue to use all available tools to root out cybercrime in New York City and beyond.”

The defendants who were indicted face charges ranging from second-degree grand to third-degree larceny to fourth-degree conspiracy to second-degree criminal possession of a forged instrument. The stint has been going on since June of 2008.

According to documents filed in court and statements made on the record in court, beginning in 2008, the accused obtained personal identification information including names and credit card account numbers of identity theft victims. Online data traffickers sold this information through Web-based portals and then the gang would store the stolen credit card information in shared e-mail accounts.  The defendants then recruited individuals to act as “shoppers,” who entered stores and used the manufactured cards containing the shoppers’ real names to purchase goods for S3’s own use or to resell for profit.

“This investigation highlights the threats posed to businesses and individuals by criminal enterprises engaged in cyberfraud and identity theft, which adversely impact local communities,” said Brian G. Parr, special agent in charge of the New York Field Office, U.S. Secret Service. “The Secret Service continues its commitment to combating these types of crimes by maintaining strategic alliances with local prosecutors in order to thwart these criminal schemes and bring the perpetrators to justice.”

Those involved would allegedly buy various Apple products and gift cards from stores in New York, Florida, Wisconsin, New Jersey, Connecticut, Alabama, Oregon, Indiana, Georgia, Nevada, Pennsylvania, Virginia and the District of Columbia. The products would then reportedly be moved to middlemen in Brooklyn, who would buy the goods at retail value from the gang and sell them for a profit.

The arrest of S3 members gives hope that 2011 will be a big year in the hampering of cyber crime. 2010 proved to be a promising year for arresting cybercriminals, according to authorities. For example, in October, the FBI arrested more than 90 suspected members of an international cyber crime ring accused of stealing about $70 million from bank accounts in the United States

Recently, executives have been directing their attention on how malware like the ZeuS Trojan or Spyeye, particularly after it was reported that annual financial losses from online fraud can be up to $6 billion.

The investigation into S3, which was led by the New York County District Attorney's Office's Cybercrime and Identity Theft Bureau, U.S. Secret Service and cybercrime analysts, is continuing.

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Carrie Schmelkin is a Web Editor for TechZone360. Previously, she worked as Assistant Editor at the New Canaan Advertiser, a 102-year-old weekly newspaper, covering news and enhancing the publication�s social media initiaitives. Carrie holds a bachelor�s degree in journalism and a bachelor�s degree in English from the S.I. Newhouse School of Public Communications at Syracuse University. To read more of her articles, please visit her columnist page.

Edited by Carrie Schmelkin

TechZone360 Web Editor

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