Fifteen defendants have pleaded guilty for their roles in an international multimillion dollar scheme to defraud Americans through fake online auctions, according to the US Justice Department.
According to court documents, the defendants participated in a criminal conspiracy that involved large-scale online auction fraud. Romania-based members of the conspiracy posted fake ads on online auction and sales websites such as Craigslist and eBay for expensive goods such as automobiles that did not exist.
Members of the conspiracy would convince American victims to send money for the advertised goods by fabricating persuasive stories, such as posing as a military member who needed to sell the item before deployment. The ill-gotten money would then be converted to bitcoin for laundering purposes.
Among the 15, Romanians Bogdan-Stefan Popescu, Liviu-Sorin Nedelcu, Vlad-Calin Nistor, and Beniamin-Filip Ologeanu each pleaded guilty to one count of RICO [Racketeer Influenced and Corrupt Organizations] conspiracy.
According to court documents, Popescu operated a car wash in Bucharest, Romania, where he managed co-conspirators in the RICO enterprise and oversaw an operation in which he knowingly negotiated fraudulently obtained bitcoin through various deceptive ways.
For example, Popescu would sometimes receive cryptocurrency from co-conspirators who obtained the funds through online fraud scams and then transfer the cryptocurrency to other conspirators, such as Nistor. Popescu would then direct Nistor to exchange the cryptocurrency for a fiat currency, and then deposit the fiat currency into bank accounts held in the names of various employees and family members.
“Today’s modern cybercriminals rely on increasingly sophisticated techniques to defraud victims, often masquerading as legitimate businesses,” Assistant Attorney General Brian Benczkowski of the Justice Department’s Criminal Division said in a statement. “These guilty pleas demonstrate that the United States will hold accountable foreign and domestic criminal enterprises and their enablers, including crooked bitcoin exchanges that swindle the American public.”
Court documents show that Nedelcu worked in conjunction with others to post fake advertisements for goods online. To maintain the appearance of legitimacy, Nedelcu created fictitious entities through which he purported to sell vehicles. Once he and his co-conspirators convinced victims to purchase falsely advertised goods, they sent the victims invoices for payment that appeared to be from legitimate sellers, such as eBay Motors.
In addition to providing money laundering services, Popescu emailed co-conspirators usernames and passwords for accessing IP [internet protocol] address anonymizing services, and sent email addresses and passwords to use for posting fraudulent advertisements. Popescu also assisted members of the RICO conspiracy in persuading victims to send in money by connecting them with other members who would pretend to be eBay customer service representatives over the phone.
The Justice Department said that once he received a payment, Nedelcu and his co-conspirators engaged in a sophisticated money laundering scheme to convert the payment into bitcoin.
Nistor was the founder and owner of Romania-based Bitcoin exchange Coinflux Services SRL through which he exchanged cryptocurrency into local fiat currency on behalf of the Romania-based members of the conspiracy. According to plea documents, Nistor exchanged more than $1.8 million worth of bitcoin for Popescu.
Ologeanu worked with others in the conspiracy to post advertisements for goods to auction websites, including eBay and Craigslist. Once Ologeanu convinced victims to purchase and provide payment for falsely advertised items, he would contact US-based conspirators to convert the victim’s payment into other forms of payment and transfer part of it back to himself in bitcoin. Ologeanu also purchased fraud proceeds from other co-conspirators, typically in the form of prepaid debit cards, to be laundered by US-based co-conspirators.
The 15 defendants have yet to be sentenced.