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Trio face online hacking charges

By ASSOCIATED PRESS
Published March 13, 2007

WASHINGTON - Three men from India have been indicted on federal charges of hacking into online brokerage accounts operated by TD Ameritrade Holding Corp., E-Trade Financial Corp. and others to inflate stock values and their own profits, government investigators said Monday.

The alleged "hack, pump and dump" scheme has cost one brokerage firm at least $2-million in losses, prosecutors said. An estimated 60 customers and nine U.S. brokerage firms, including Ameritrade, E-Trade and OptionsXpress, were duped in the case during a four-month period last year, according to the Justice Department.

The three men bought stocks through the U.S. online firms with their own accounts, according to the 23-count indictment returned in January and unsealed Monday in Omaha, Neb. Operating from Thailand and India, the men then allegedly used stolen identity information to pose as other online share-buyers, inflating the value of myriad securities, including those of search engine giant Google Inc.

The men later sold their own shares at a higher price - turning a profit of more than $121,500, according to the Securities and Exchange Commission, which filed separate civil charges against all three men in federal court in Nebraska.

One victim had $180,000 cash and equity in his account, and five days later returned from a trip to find a negative $200,000 balance, according to the SEC.

Two of the three suspects - Jaisankar Marimuthu, 32, of Chennai, India, and Thirugnanam Ramanathan, 34, an Indian native who lives in Malaysia - were arrested in recent weeks in Hong Kong, the Justice Department said. The third, Chockalingam Ramanathan, 33, also of Chennai, is still at large.

The case marks the first time hackers suspected of defrauding U.S.-based online brokerage firms have been arrested overseas, the Justice Department said. The SEC has brought two other account intrusion cases since December, involving defendants in Estonia and Latvia.

Assistant Attorney General Alice Fisher said such cases "pose serious risks to investors and brokerage firms across the globe."

Officials at Ameritrade and E-Trade in October said online fraud cases cost the companies a combined $22-million late last year.

[Last modified March 13, 2007, 02:04:55]