In what is being called a ‘hack, pump and dump’ scheme, three Indians were on Wednesday indicted by a federal grand jury in Omaha, Nebraska, for perpetuating a high-tech, international fraud scheme designed to hijack online brokerage accounts for profit. The 23-count indictment charges the trio of conspiracy, fraud and aggravated identity theft. The defendants have been identified as Jaisankar Marimuthu, 32, and Chockalingam Ramanathan, 33, both residents of Chennai, and Thirugnanam Ramanathan, 34, a native of India and resident of Malaysia.

According to the indictment, between July and November 2006, the defendants, operating primarily from Thailand and India, used their personal online brokerage accounts to purchase shares of several thinly-traded stocks. They then hacked into online brokerage accounts of others using stolen usernames and passwords or established new brokerage accounts using stolen identities. Using these accounts, the defendants made scores of unauthorised purchases of the same stocks to drive up the market price. Once the share prices were artificially inflated, the defendants sold their own shares for a substantial profit.

Investigations have identified at least 60 customers and nine brokerage firms in the United States and elsewhere as victims, with one of the brokerage firms reporting more than $2 million in losses. Wednesday’s case marks the first time that individuals have been arrested overseas in connection with an online brokerage intrusion scheme perpetrated in the United States. In related action, the US Securities and Exchange Commission filed a civil complaint against all three defendants.

“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 Fisher. “Today’s case demonstrates our commitment to aggressively investigate and prosecute these schemes wherever they originate.”

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