Three Indians charged with hacking into US brokerage accounts

WASHINGTON: Three people from India were charged Monday with hacking into brokerage accounts in the United States as part of a multimillion-dollar scheme to pump up the value of their shares, officials said.   

An indictment unsealed on Monday charged the three with securities fraud, computer fraud, identity theft and other charges in connection with a high-tech "pump and dump" scheme.   

The Justice Department said in a statement that two of the three had been arrested in Asia and were being held for extradition to a US federal court in Omaha, Nebraska.   

The case marked the first overseas arrests in connection with an online brokerage intrusion scheme perpetrated in the United States, officials said.   

"These new forms of high-tech identity and securities fraud pose serious risks to investors and brokerage firms across the globe," said Assistant Attorney General Alice Fisher.   

"Today's case demonstrates our commitment to aggressively investigate and prosecute these schemes wherever they originate. I commend the investigators and prosecutors in this case for their tremendous cooperation and speedy action to track the source of this scheme halfway around the world."    

Authorities said at least 60 customers and nine brokerage firms in the United States and elsewhere had been victimized, with one of the brokerage firms reporting more than two million dollars in losses.   

A 23-count indictment, returned in January 2007 and unsealed Monday, charges Jaisankar Marimuthu, 32, and Chockalingam Ramanathan, 33, both residents of Chennai, India, each with one count of conspiracy, eight counts of computer fraud, six counts of wire fraud, two counts of securities fraud, and six counts of aggravated identity theft.   

Also named in the indictment was Thirugnanam Ramanathan, 34, a native of India and resident of Malaysia. He was charged with one count of conspiracy, two counts of computer fraud, and two counts of aggravated identity theft.   

In a related action, the Securities and Exchange Commission filed a civil complaint against all three defendants in federal court in Nebraska seeking restitution and civil fines.   

Authorities said the three were part of a fraud scheme that hijacked online brokerage accounts in the United States to pump of the value of shares, which were then sold for a profit.   

According to the indictment, the three, operating mainly from Thailand and India, perpetrated the scheme between July and November 2006.   

They used their personal online brokerage accounts to purchase shares of several thinly traded stocks, officials said. They then hacked into online brokerage accounts using stolen usernames and passwords and made scores of unauthorized purchases of the stocks to drive up the market price.   

Once the share prices were artificially inflated, the defendants sold their own shares for a substantial profit.   

The indictment stated that the three used online brokerage accounts at TD Ameritrade, E-Trade, Firstrade, ChoiceTrade, OptionsXpress, TradeKing and TerraNova.   

According to an SEC complaint, one victim had 180,000 dollars cash and equity in his online brokerage account before a five-day fishing trip only to find a negative 200,000-dollar balance when he returned.   

Marimuthu was arrested on December 20 by Hong Kong police on charges there of computer fraud, money laundering, and possession of equipment to make a false instrument.   

Thirugnanam Ramanathan was arrested by authorities in Hong Kong on January 26 on a US provisional arrest warrant. Chockalingam Ramanathan is at large.   

The stocks involved in the scheme included Acorda Therapeutics, IGI Inc., Earth Products Technologies, Image Entertainment, Investors Capital Holdings, Conversion Services International, Pressure BioSciences, Accelr8 Technology Corp., CTR Investments Consulting, Sun Microsystems, Citizens Financial Corp, American Access Technologies, Pacel Corporation, and put options, allowing a sale at a specific price, on Google.