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Indictments Returned on $10M Hacking Scheme - InternetNews.
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Indictments Returned on $10M Hacking Scheme

Five Americans will make their initial appearance in the U.S. District Court in Los Angeles later this month to respond to charges they participated in a scheme to defraud distributor Ingram Micro out of $10 million worth of computer equipment.

The ringleader, Calin Mateias, 24, a computer cracker from Bucharest, Romania, was also indicted by a federal grand jury Thursday. Going by his online persona, "Dr. Mengele," Mateias allegedly recruited Americans in chat rooms to provide U.S. mailing addresses for the Ingram orders, which were then shipped on to Romania.

"The defendants repeatedly and over the course of four years fraudulently bypassed Ingram's password security system, ordered Ingram computer equipment for shipment to various fictitious people and businesses at addresses in the United States, and coordinated activities of co-conspirators in the United States and abroad," the indictment stated.

As far back as 1999, according to the court documents, Mateias had cracked into Ingram Micro's network by stepping around security measures at the company's online ordering site and getting equipment shipped to Romania. When Ingram Micro caught onto the scheme, they cancelled Romanian shipments in February 1999.

At that time Mateias allegedly recruited Olufemi Tinubu and Tarion Finley in Georgia, Valeriu Crisoven of Florida, Jeremy Long in Virginia and Warren Bailey in Alaska, to provide U.S. addresses. Meeting in chat rooms, Mateias and the five defendants allegedly discussed ways to set up "mail drops," where the equipment could be picked up. After receiving the equipment, the five either sold the equipment and sent the proceeds to Mateias or shipped the equipment directly on to Romania.

According to officials, Ingram Micro was able to intercept nearly half of the $10 million in equipment before it was shipped.

Mateias, Tinubu, Finley, Crisoven, Long and Bailey all face one charge of conspiracy to commit mail fraud. Mateias was also charged with 13 counts of mail fraud while the others all face lesser mail fraud counts against them. Mateias, in a separate trial, faces an 11-count fraud indictment with the U.S. Attorney's Office in the Western District of Pennsylvania.

According to officials at the Department of Justice (DoJ), the case was handled by the FBI cyber crimes squad, the Romanian National Police, 14 FBI field offices and the FBI's legal attache office in Bucharest.

Brian Hoffstadt, assistant U.S. Attorney at the DoJ, said authorities are working with the Romanian government to decide whether Mateias will be tried in Romanian or extradited to the United States to face charges.

"It's just a decision that hasn't been made yet -- which justice system is going to prosecute him," he said.

Hoffstadt said there is still work to be done regarding the sentencing and fines that will be assessed against the defendants if they should lose their case. Mateias, if charged in a U.S. court, could get up to 90 years in prison and fined to repay Ingram Micro as well as other damages. The five Americans could face between five and 35 year prison sentences if convicted. More information will become available at the arraignment later this month.

Ingram Micro officials were quick to put out a statement Thursday reassuring customers of the company's security measures. Mateias was allegedly able to set up a fictitious company name, like "T&T Automotors" or "PC Technology Inc.," and order equipment from the otherwise secure online ordering Web site.

"The unfortunate reality is that no company is immune, but we can work together to prevent and protect our corporations against unlawful acts such as these -- that is why we will remain at the forefront of this investigation and continue to provide full cooperation to the authorities," the statement read.

Officials at the Santa Ana, Calif., company also hint that other distributors are involved in the fraud investigation, although no other companies were named in the DoJ account or by Ingram Micro.

Ingram spokeswoman Marie Meoli said the company is not "alone in this pursuit" and is "working with and on behalf of the IT industry to bring this matter to justice."