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Financial Crimes
02/03/2014

Russian man sentenced to 30 months for securities fraud following HSI investigation

NEWARK, N.J. – A Russian national living in New York was sentenced Friday to 30 months in federal prison for conspiring with others to hack into retail brokerage accounts and execute sham trades, following an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

In addition to the prison term, U.S. District Judge Esther Salas sentenced Petr Murmylyuk, 33, of Brooklyn, N.Y., to three years of supervised release following his sentence and ordered him to pay more than $505,000 in restitution. Murmylyuk previously pleaded guilty to conspiracy to commit securities fraud in July after being charged by New Jersey U.S. Attorney Paul J. Fishman.

"Financial crimes threaten the health of our national economy. Criminals who attempt to cheat law-abiding citizens out of their hard-earned money will continue to be a major investigative priority for HSI," said HSI Newark Special Agent in Charge Andrew McLees. "This case illustrates the ability of federal law enforcement agencies to leverage resources and work together to achieve justice."

According to court documents, Murmylyuk admitted he participated in a conspiracy to steal from online trading accounts at Scottrade, Etrade, Fidelity, Schwab and other brokerage firms. Members of the conspiracy first gained unauthorized access to the online accounts of brokerage firm customers. The conspirators then used stolen identities to open additional accounts – referred to in the Information as "Profit Accounts" – at other brokerage houses. They then caused the victims’ accounts to make unprofitable and illogical securities trades with the Profit Accounts, leading to losses in the victims’ accounts and gains in the Profit Accounts. One version of the fraud involved causing the victims’ accounts to sell options contracts to the Profit Accounts, then to purchase the same contracts back minutes later for many times the price.

The members of the conspiracy recruited foreign nationals visiting, studying and living in the United States to open bank accounts into which illegal proceeds could be deposited. The conspirators then caused the proceeds of the sham trades to be transferred from the Profit Accounts into those accounts, where the stolen money could be withdrawn. The scheme caused combined losses to Scottrade, Etrade, Fidelity, Schwab and other affected brokerage firms of approximately $1 million.

In addition to HSI Newark, FBI New York, Internal Revenue Service – Criminal Investigations New York, U.S. Securities and Exchange Commission Philadelphia and the Justice Department’s Computer Crime and Intellectual Property Section all assisted with the investigation. The Manhattan District Attorney’s Office also contributed and cooperated in coordinating parallel investigations.

Assistant U.S. Attorney Christopher J. Kelly prosecuted this case.

This prosecution is part of efforts underway by the Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.

The task force works to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.

For more information about the task force visit: www.stopfraud.gov.