A day trader has been indicted on four counts for his alleged role in a scheme that involved hacking into online brokerage accounts and using them to make fraudulent transactions.
Joseph Willner, 42, of Ambler, Pennsylvania, has been charged with conspiracy to commit wire fraud, conspiracy to commit securities fraud and computer intrusions, securities fraud, and conspiracy to commit money laundering.
Charges were first brought against Willner late last month by the U.S. Securities and Exchange Commission (SEC), which claimed the man made at least $700,000 through unauthorized trades involving more than 100 hacked brokerage accounts. The U.S. Attorney’s Office for the Eastern District of New York and the Department of Justice Criminal Division’s Fraud Section announced bringing charges against Willner this week.
According to authorities, between September 2014 and May 2017, the suspect and other unnamed individuals hacked into online brokerage accounts and used that access to purchase stock at artificially high prices they set by placing short sale offers using their own brokerage accounts.
After purchasing stock through victims’ accounts at above-market prices, they repurchased the stock at below-market prices. These activities took place within minutes and the operators of the scheme quickly made a profit, which they laundered by acquiring bitcoins.
In one example described in the indictment, Wilner used his own brokerage account to place a short sale order for 537 shares priced at $14.88 per share and executed the trade against one of the hacked accounts. He then repurchased the shares at $9.40 per share, landing him a profit of nearly $3,000.
Members of the scheme often used direct messages on Twitter and IRC chatrooms to communicate.
Investigators determined that the actions of Willner and his co-conspirators, one of which has been described as a foreign national, cost brokerage firms more than $2 million.
Wilner was arrested in mid-June in his hometown. If convicted, he faces up to 20 years in prison, the Justice Department said.
“This case involves a 21st Century cyber boiler room, except the buyers were not even aware they were purchasing shares of stock,” said William F. Sweeney, Jr., Assistant Director-in-Charge at the FBI’s Field Office in New York.
Related: SEC Says It Was Hacked in 2016