Some of the things I've been thinking about and trying to connect:

• Not Kevin's informaton at StrangelyPerfect.tv  showing many negative option scams set up companies in the UK (details here)
• The recent Trend Micro paper detailing a cybercrime hub operating out of Estonia which extends into Europe and the United States (pdf available here)
• The potential significance of hidden negative option "bizop kit" victims alleging the presence of  trojan horses on the CDs they received in the mail
• The economic relationship between Estonia and The Isle of Man

AGAIN – these are very loosely connected thoughts…or maybe not even connected at all…in fact I don't even present any possible conclusions

Today I was asking Lynndel Edgington of Eagle Research Associates about a comment Not Kevin made over at StrangelyPerfect.tv:

"Setting up a UK Ltd company at Companies House is very easy and no they don’t ask for proof of id or anything. You only need to register for Vat if/when your turnover exceeds a certain amount, so that comes after registration (if at all).
There are however quite strict regulations about your obligations as a Director, filing accounts on time etc. See:
http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073870537

Not sure how these companies would get their stuff from Companies House if they are using false addresses, filing accounts for all those companies would be a nightmare too (if done properly) – which is another reason it’s odd that there are so many of them which just multiplies the work and could make it very confusing! Perhaps they are not planning to stick around long enough to bother with legalities like filing accounts!? (Allegedly) (You can be in business for around 18 months I think before your first years accounts are due)."

I suggest you read the full discussion here to get the full context.

As Lynndel pointed out, Not Kevin really answered his own question:

(Lynndel): "They don't plan on being around long enough to worry about reports/accounts are due.  This is get in quick, get the cash and get out before the authorities come calling.  The only ones who get caught are those who get greedy and try to milk it longer than they should.  They forget they can wait a couple of months, and then do it all over with a new name and a slightly different look and do it all over again."

Seemingly related to all of this is the fascinating research recently performed by Griffith University's Professor Jason Sharman

Which appears to indicate that the U.S. and the U.K. themselves may be the "dirtiest tax havens" which is fascinating as Sharman concludes:

""The United States, Great Britain and other OECD states have chosen not to comply with the international standards which they have been largely responsible for putting in place."

According to Switzerland's Le Temps Newspaper:

"With a small budget, and using classified ads that proliferate on the Internet or in the press, this professor of the Center for Governance and Public Policy at Griffith University (Australia) made bids to set up shell companies in 22 countries — some labeled as tax havens; others are very respectable members of the OECD."

The following are excerpted from Jason Sharman's presentation of his key findings of his recent study:

Summary of the research

"The research involved electronically soliciting offers of anonymous corporate vehicles from 45 different corporate service providers in 22 different countries, and collating the various responses. Anonymous shell companies in isolation can sometimes be useful in disguising financial crime, but generally depend on associated bank accounts. And so the next step was trying to set up bank accounts linked to these shell companies. To the extent that the shell companies are anonymous (that is, where the beneficial owner remains unknown), the bank account will also be de facto anonymous. Seventeen of the 45 attempts to solicit anonymous corporate vehicles met with success. Of these, 13 of 17 successful approaches were to service providers in OECD countries (seven in the UK, four in the United States, one in Spain, and one in Canada). This compared with only four service providers of 28 willing to provide anonymous shell companies in countries often identified as ‘tax havens’
(Hong Kong, Singapore, Belize and Uruguay)."

Interesting details from Jason Sharman's research:

• "In 2009, the author was able to create a Nevada company and then open an account at one of America’s most prominent banks with
  only a scanned copy of a driver’s licence." 
• "the author purchased an anonymous England and Wales company for GBP515, incorporated within a day"
• The Economist highlighted the following amazing finding from Sharman's study:
  • "One example was Britain, where in 45 minutes on the internet he formed a company without providing identification, was issued with bearer shares (which have been almost universally outlawed because they confer completely anonymous ownership) as well as nominee directors and a secretary. All was achieved at a cost of £515.95 ($753)."

Constantly changing names as a keystone to a "business model"

This isn't really anything new, but I really enjoyed the wording the authors of the Trend Micro Cybercrime Hub report used to describe it:"The criminal outfit uses a lot of daughter companies that operate in Europe and in the United States. These daughter companies’ names quickly get the heat when they become involved in Internet abuse and other cybercrimes. They disappear after getting bad publicity or when upstream providers terminate their contracts. This does not cause much harm to the operation as a whole, however, as the same cybercriminal just continues its business under a new name. In fact, constantly changing names is part of the company’s business model"

The potential significance of hidden negative option "bizop kit" victims alleging the presence of viruses and/or trojan horses on the CD-Roms they received in the mail

There were several comments made on various sites that the bizop kit CDs contained trojan horses, which can be used to steal data or as the Trend Micro paper reveals –  hijack Google queries and even seamlessly replace advertisements on legitimate sites.

Of course a trojan horse would always be a concern, but imagine if the cybercriminal organization behind the planting of trojan horses operated out of a country where credit card fraud and internet-based financial fraud were ongoing concerns.

I have no idea if any of the allegations about the trojans were true or how pervasive the allegations were.

According to the U.S. Department of State's information on Estonia:

"Credit card fraud is an ongoing concern, as is Internet-based financial fraud and “Internet dating” fraud.  Travelers should take precautions to safeguard their credit cards and report any suspected unauthorized transaction to the credit card company immediately.  Racially motivated verbal harassment and, on occasion, physical assault of Americans and other nationals of non-Caucasian ethnicity has occurred.   If an incident occurs, it should be reported to the police and to the Embassy."

The economic relationship between Estonia and The Isle of Man

This is significantly outside my scope of expertise so I could be completely grasping at straws here or someone may look at it and wonder why I'm stating the obvious:

• Estonia is a country where credit card fraud and internet-based financial fraud are ongoing concerns
• Isle of Man (IOM) is a self-governing British Crown Dependency where offshore banking is a key sector of the economy and according to the IOM government is developing a global reputation for a diverse array of niche, quality sectors including:
  • High-tech manufacturing
  • E-Business
  • E-Gaming
  • Ship and super yacht management
  • Aircraft registration
  • Agricultural and fisheries produce
  • Film and television production
  • Space commerce
  • Entrepreneur/trading gateway
• In it's most recently "report card" on the Isle of Man's observance of AML/CFT (Anti-Money Laundering and Combating the Financing of Terrorism) the IMF expressed concerns about Customer Due Diligence (CDD) measures (see item 30 here), where one of the observations is:
  • "It was not evident to the assessors in all cases that the financial institutions were taking fully into account the increased risk of dealing on such a scale with nonresident non face-to-face business, and the assessors noted an uneven level of controls in practice in some institutions when relying on third parties to have properly conducted CDD measures."
• The recent agreement between the IOM government and the Estonian government:
  • "The agreement between the two governments is based on the model published by the Organisation for Economic Co-operation and Development (OECD). In addition to this agreement signalling that the Isle of Man and Estonia wish to develop their bilateral economic relations, the DTA will also act to prevent tax evasion, and delivers the OECD’s agreed international standard on tax transparency and exchange of information."

At this point I still have no idea if there are any real connections between all of this data

According to court documents in support of the guilty plea, before FMI sold its mortgages to financial institutions as long term investors, FMI utilized another group of financial institutions (referred to as “warehouse lenders”) to temporarily fund the mortgages before they were sold. Beginning in 2001, FMI began defrauding a series of warehouse lenders and eventually two other financial institutions serving as long term investors, causing an accumulated loss of at least $33 million to four financial institutions by the time FMI filed for bankruptcy in June 2008. The financial institutions were First Tennessee Bank, Franklin Bank, Wells Fargo Bank, and EMC Mortgage Corporation, a wholly owned subsidiary of JP Morgan Chase & Co. Taneja accomplished the scheme by (i) creating fictitious loans with bogus loan closings, (ii) selling the same legitimate loan to multiple investors, and (iii) pocketing the proceeds generated from refinancing loans, when the bulk of those proceeds were intended to payoff prior mortgages on the same properties. Court documents state that for at least part of the scheme Taneja conspired with the owner of TitlePro, a Fairfax title company. The company went out of business in May of 2008.

The investigation involving Financial Mortgage, Inc., was conducted by Special Agents of the FBI and the Internal Revenue Service. The prosecution of the case is being handled by Assistant United States Attorney Stephen Learned.

RICHARD WALTERS SENTENCED IN D.C. PROPERTY TAX REFUND FRAUD SCHEME

Brother of Ringleader Deposited $4,900,199 in Fraudulently Obtained D.C. Government
Checks and Received At Least $1,284,574 in Monies and Home Improvements

Greenbelt, Maryland – U.S. District Judge Alexander Williams, Jr. sentenced Richard Walters, age 49, of Bowie, Maryland, today to 51 months in prison followed by three years of supervised release for receipt of stolen property and conspiracy to commit money laundering in connection with a property tax refund scheme in which over $48 million were stolen from the District of Columbia Office of Tax and Revenue, announced United States Attorney for the District of Maryland Rod J. Rosenstein and U.S. Attorney for the District of Columbia Jeffrey A. Taylor. Judge Williams also ordered that Richard Walters forfeit $4,900,199 and, in order to satisfy such money judgment, to forfeit a home in the Virgin Islands, two homes in Bowie, Maryland, a 2005 Bentley, four other vehicles, jewelry and monies held in several bank accounts.

U.S. Attorney Rod J. Rosenstein stated, “Richard Walters and Harriette Walters deposited fifteen District of Columbia government checks totaling almost $5 million into a bank account in the name of his plumbing business over a period of six years. We will seek the forfeiture of all criminal proceeds and property purchased with stolen money because victims deserve restitution and criminals must not be permitted to profit from their crimes.”

According to the plea agreement, Richard Walters is the brother of Harriette Walters, a former manager within the District of Columbia Office of Tax and Revenue. Richard Walters owned and operated a plumbing business called “Helmet’s Plumbing.” From March 2001 to May 2007, Richard Walters, and on occasion, Harriette Walters with Richard’s knowledge, deposited 15 District of Columbia government checks totaling $4,900,199 into a bank account Richard Walters maintained for his plumbing business. Richard Walters knew that the checks had been obtained by fraud as part of a scheme to embezzle funds from the District of Columbia government. The individual checks ranged in amounts from approximately $95,148 to $541,100.

On many occasions, Harriette directed Richard to take the checks to a bank and have Walter Jones, a bank manager, deposit them into the Helmet account. In addition, on several occasions, Richard Walters deposited a fraudulent District of Columbia government check and immediately thereafter directed Walter Jones to prepare cashier’s checks to recipients of Richard’s choosing.

From July 2001 to November 2007, Richard and Harriette Walters distributed funds from the Helmet account, including at least: 46 transactions directing $1,059,307.50 to accounts controlled by Richard Walters; 14 transactions directing $225,266.87 towards projects for a home that Richard Walters was building in the U.S. Virgin Islands; 11 transactions directing $461,000 to Harriette Walters; $47,149 to the Washington Wizards to purchase season tickets; $40,000 to Neiman Marcus; and $18,100 to Saks Fifth Avenue for purchases. Richard Walters also purchased a 2005 Bentley automobile with proceeds of the fraud.

Harriette M. Walters, age 52, of Washington, D.C., pleaded guilty in the U.S. District Court for the District of Columbia on September 16, 2008 and faces a maximum sentence of 20 years in prison for wire fraud and money laundering conspiracy; 10 years for District of Columbia tax evasion; five years for federal tax evasion; and an order to pay restitution in the amount of $48,115,419.09. U.S. District Judge for the District of Columbia Emmet G. Sullivan has scheduled sentencing for Harriette Walters on March 25, 2009 at 11:00 a.m. Alethia O. Grooms, age 52, of Clinton, Maryland and Samuel Earl Pope, age 61, of Washington, D.C. also pleaded guilty to their participation in the scheme, and are scheduled to be sentenced on February 24 and 26, 2009, respectively.

Patricia A. Steven, age 73, of Harwood, Maryland; Robert Steven, age 55, of Edgewater, Maryland; Connie Alexander, age 52, of Bowie, Maryland; Richard Walters, age 49, of Bowie, Maryland; Walter Jones, age 33, of Essex, Maryland; Marilyn Yoon, age 40, of Derwood, Maryland; and Ricardo R. Walters, age 33, of Ft. Washington, Maryland, have pleaded guilty in U.S. District Court for the District of Maryland to their participation in the scheme. Patricia Steven, Robert Steven, Richard Walters and Alexander each face a maximum sentence of 10 years in prison for receipt of stolen property and 20 years in prison for conspiracy to commit money laundering at their sentencing scheduled by U.S. District Judge for the District of Maryland Alexander Williams, Jr. on December 8 at 10:00 a.m., December 8 at 1:15 p..m., November 4, 2008, and February 12, 2009, respectively. Walter Jones faces a maximum sentence of 20 years in prison and a fine of $500,000 or twice the value of the transactions involved, whichever is greater, for conspiracy to commit money laundering at his sentencing on a date which is not yet scheduled. Marilyn Yoon faces a maximum sentence of 10 years in prison and a $250,000 fine for possession of property obtained by fraud at her sentencing on
December 4, 2008.

United States Attorneys Rod J. Rosenstein and Jeffrey A. Taylor thanked the Federal Bureau of Investigation; the Internal Revenue Service – Criminal Investigation; the Inspector General’s Office for the District of Columbia; the District of Columbia Office of Tax and Revenue, Criminal Investigation Division; the Treasury Inspector General for Tax Administration; and the District of Columbia Office of the Chief Financial Officer, Office of Integrity and Oversight for their investigative work. Mr. Rosenstein commended Assistant United States Attorneys Jonathan Su and Deborah Johnston from the District of Maryland and Assistant United States Attorneys Timothy Lynch and David Johnson from the District of Columbia, who are prosecuting the case.

For more information, CONTACT AUSA VICKIE E. LEDUC or MARCIA MURPHY at (410) 209-4885

• Baltimore Press Releases
• Baltimore Home Page
• FBI Home Page

Specifically, PERDIGAO pled guilty to Counts 1, 13, 31 through 56, 60 and 61of the Second Superseding Indictment.  PERDIGAO further consents to forfeiture of approximately $30 million to the United States that was charged in the Second Superseding Indictment, and which PERDIGAO admittedly stole as part of his elaborate fraud scheme.

According to court documents, PERDIGAO, a former partner at the law firm of Adams and Reese, provided legal services to companies in Louisiana’s gambling industry.  PERDIGAO admitted today in court to stealing checks belonging to Adams & Reese and depositing those checks into accounts controlled by PERDIGAO.  Further, he admitted stealing a tax refund check payable in the amount of $485,000 to Horseshoe Entertainment, which was being acquired by Harrah’s.  Once these checks were deposited, they became available for withdrawal and thus exposed the banks, such as Bank One (now Chase) to the risk of civil liability and financial loss.

PERDIGAO also admitted to concocting a fraudulent billing scheme whereby he would submit phony invoices to his clients including Pinnacle Entertainment, Inc. and Boomtown, causing them to remit millions of dollars in fraudulent payments.

According to court records, during a one-week period in October, 2004, PERDIGAO wired nearly $20,000,000 to a Swiss bank account that he controlled in Zurich, Switzerland. Additionally, PERDIGAO pled guilty to tax evasion and filing false tax returns, for the tax calendar years 2000 through 2004. The tax due and owing by PERDIGAO exceeds approximately $4,500,000 as indicated in the indictment.   The indictment and prosecution of individuals who intentionally conceal income and evade taxes is a vital element in maintaining the public confidence in our tax system.  Income from all sources, legal and illegal is taxable.

By failing to report substantial taxable income and utilizing fraudulent losses on these tax returns, PERDIGAO qualified himself for the earned income tax credit. The earned income tax credit is a refundable federal income tax credit for low-income, working individuals and families.

PERDIGAO faces a maximum term of imprisonment of over 300 years.  He also faces possible fines of over $8 million, as well as criminal forfeiture of $30 million.   Sentencing has been scheduled for February 11, 2009.

U. S. Attorney Jim Letten, speaking to today’s conviction and forfeiture, stated:

“As the result of the expertise, hard work and dedication of the prosecution team, including FBI and IRS Special Agents, a local attorney who had misused his position of trust to grossly enrich himself in a contorted scheme of theft and obstruction, has been brought to justice through his own admission of guilt.  Defendant JAIME PERDIGAO, by openly admitting his guilt to 30 counts of fraud, theft, tax and bank violations, computer hacking, and obstruction of justice, has further demonstrated that this investigation and prosecution by the United States was and is sound, and our evidence uncontroverted and overwhelming.   Moreover, today’s guilty plea, along with the U. S. District Court’s previous rejection of PERDIGAO’S myriad claims against the United States, is confirmation that PERDIGAO’s legal filings, evolving over many months, were absolutely without any merit whatsoever, and were part of a desperate and vicious attack in an attempt to escape punishment for such crimes.  As we have prevailed in this case through professionalism and determination, we will continue to follow evidence of crime wherever it takes us.”

The case was investigated by the Internal Revenue Service and the Federal Bureau of Investigation.

The case is being prosecuted by Assistant U. S. Attorneys James Mann, Salvador Perricone,  Brian M. Klebba, and Loan “Mimi” Nguyen.

Fraud Cost Investors More Than $2 Billion

Press release from the U.S. Department of Justice:

WASHINGTON —A federal jury today convicted Lance K. Poulsen, former president, owner and chief executive officer of National Century Financial Enterprises (NCFE) of conspiracy, fraud, and money laundering, Acting Assistant Attorney General Matthew Friedrich of the Criminal Division and U.S. Attorney Gregory G. Lockhart for the Southern District of Ohio announced. The charges stemmed from a scheme to deceive investors about the financial health of NCFE that cost investors more than $2 billion. The company, which was based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.

The Columbus, Ohio, jury convicted Poulsen, 65, after a four-week trial on all 12 charged counts contained in a July 2007 superseding indictment, including one count of conspiracy, six counts of securities fraud, one count of wire fraud, one count of money laundering conspiracy, and three counts of concealment money laundering.

At trial, witnesses testified that Poulsen engaged in a scheme from 1995 until the collapse of the company to deceive investors and rating agencies about the financial health of NCFE and how investors’ money would be used. NCFE bought accounts receivable from healthcare providers using money NCFE obtained through the sale of asset-backed notes to institutional investors, including pension funds, insurance companies and churches.

Evidence at trial showed that NCFE misused investors’ money and made unsecured loans to health care providers, including those owned in whole or in part by Poulsen and other owners. Former employees testified that Poulsen and other NCFE executives covered up the fraud by lying to investors and ratings agencies. The government presented evidence that Poulsen and others created investor reports containing fabricated data, and moved money back and forth between programs, in order to make it appear that NCFE was in compliance with its own governing documents. Evidence showed that Poulsen knew the business model NCFE presented to the investing public differed drastically from the way NCFE did business within its own walls.

“Today’s conviction closes another chapter in the long effort to bring former NCFE executives to justice for deceiving investors,” said Acting Assistant Attorney General Matthew Friedrich of the Criminal Division. “The Department will continue to hold accountable those corporate executives who misrepresent a company’s financial health and then leave the public to pick up the pieces.”

“Poulsen and others made millions of dollars in unsecured loans to companies they owned,” U.S. Attorney Lockhart said. “Their actions were designed to hide a financial house of cards from investors, eventually costing investors $2 billion.”

“The IRS, along with our law enforcement partners, will vigorously pursue corporate officers who victimize their investors and violate the public trust,” said Internal Revenue Service (IRS) Criminal Investigation Special Agent in Charge Jose A. Gonzalez. “Today's verdict demonstrates the government's determination to restore and ensure that trust.”

FBI Cincinnati Special Agent in Charge Keith L. Bennett stated, “The FBI notes that today's convictions are the culmination of a six year investigation which included the review of millions of pages of financial documents by federal investigators. The resolve of this cooperative effort demonstrates that the FBI and other law enforcement will not permit a few corporate executives to hijack our financial system for personal gain.”

The maximum penalty for each count of concealment money laundering, money laundering conspiracy and wire fraud is 20 years in prison and a $500,000 fine. The securities fraud and conspiracy charges are each punishable by up to five years in prison and a $250,000 fine. A sentencing date has not been set.

Poulsen, the sixth NCFE executive convicted in connection with the fraud, has been in custody since he was arrested on Oct. 17, 2007, on charges of witness tampering. A jury convicted him of conspiracy, witness tampering and obstruction on March 26, 2008, and Poulsen was sentenced to ten years in prison on those charges.

On March 13, 2008, five former NCFE executives were found guilty for their roles in the scheme to defraud investors. Donald H. Ayers, of Fort Myers, Fla., an NCFE vice chairman, chief operating officer, director, and an owner of the company, was found guilty on charges of conspiracy, securities fraud, and money laundering. Rebecca S. Parrett, of Carefree, Ariz., an NCFE vice chairman, secretary, treasurer, director, and an owner of the company, was found guilty on charges of conspiracy, securities fraud, wire fraud, and money laundering. Randolph H. Speer, of Peachtree City, Ga., NCFE’s chief financial officer, was found guilty on charges of conspiracy, securities fraud, wire fraud, and money laundering. Roger S. Faulkenberry, of Dublin, Ohio, a senior executive responsible for raising money from investors, was found guilty on charges of conspiracy, securities fraud, wire fraud, and money laundering. James E. Dierker, of Powell, Ohio, associate director of marketing and vice president of client development, was found guilty on charges of conspiracy and money laundering.

The case was prosecuted by Assistant U.S. Attorney Douglas Squires of the Southern District of Ohio, Senior Litigation Counsel Kathleen McGovern and Trial Attorneys Leo Wise and N. Nathan Dimock of the Criminal Division’s Fraud Section, with assistance from Fraud Section Paralegal Specialist Sarah Marberg, FBI Agents Matt Daly, Ingrid Schmidt and Tad Morris, IRS Special Agents Greg Ruwe and Mark Bailey, U.S. Postal Inspector Dave Mooney and Immigration and Customs Enforcement Agent Celeste Koszut.

That got me to thinking about a pretty quick 2-step process that could help people avoid such schemes in addition to the normal advice that has already put out.

This technique would apply mainly to people searching places like CraigsList for work – not people who receive unsolicited emails offering them jobs – which already have big red SCAM flags written all over them.

Now, any time you're told to collect money, take a percentage and forward it on, you can be nearly certain that you're dealing with a payment processing or money laundering scheme. But for those of you who aren't convinced or run into scammers who move beyond the keep and forward type deal – there's another quick thing you can do.

It has to do with the fact that money-laundering operations often copy legitimate websites and set up a fake storefront when recruiting potential "employees" (victims).

Very quickly, here's what you can do:

1) Put the website domain into CopyScape.com. Check to see if there are other sites that show up in the listings. You'll still need to visit them to see if they are a copy of the site you originally put into CopyScape.

2) Next go to whois.sc. What you're going to do here is put the domain for any sites that look the same into whois.sc and check the "creation date" of the domain.

3) If the creation date of the domain offering you the "employment" is newer than one of the other domains – then there's a good chance you're dealing with a money laundering scam.

Note: that doesn't mean if the domain offering you the employment is NEWER than another domain, that is NO guarantee that the site is safe. You should still follow the Rules and commen sense.

And as previously mentioned if a company wants you to take your cut and forward on money that is almost ALWAYS either a payment processing scam or a money laundering scam.

Top scam research site of the week

http://www.bobbear.co.uk/

An amazing site dedicated to exposing and helping people avoid money laundering and reshipping fraud. This is DEFINITELY one you want to keep bookmarked – especially if your a telecommuter or are embarking on a telecommuting career.

Top business site of the week:

SparkPlugging

From the site:

"We were entrepreneurs, telecommuters, moonlighters, freelancers, consultants, bloggers, tech geeks, artists, media professionals, marketers, stay at home parents, authors, podcasters, WAHMs, & WAHDs, and we didn’t want to hear the same old crap about running a business from home. We needed fresh, current, and balanced content that helped us to run a business while making sure we had time for what’s really important in life."

Top telecommuting site of the week

WebWorkerDaily

From the site:

"…written by a growing team of writers who cover the future of work in a post-broadband world. We offer practical tips and advice for anyone who uses the web for work, especially those who want to use the web to be more productive, more connected and more successful than they could otherwise"

Use the search box to find quickly find information about telecommuting, telework. Just for fun type in "telewho" and you just might discover something fun and interesting.

Top government site of the week

Export.gov

U.S. government site to help U.S. companies export. If you're interested in this area, you can start learning the basics for free right here:

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