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Financial Crimes
07/26/2013

Russian national pleads guilty in $1 million securities fraud scheme

NEWARK, N.J. – A New York man pleaded guilty Tuesday to conspiring with others to hack into retail brokerage accounts and execute sham trades. The investigation was conducted by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the Manhattan District Attorney's Office and the FBI.

Petr Murmylyuk, 33, of Brooklyn, N.Y., pleaded guilty in federal court to conspiracy to commit securities fraud. Murmylyuk previously pleaded guilty on April 15 in Manhattan District Court to grand larceny and money laundering in the second degree.

According to court documents, Murmylyuk admitted that he participated in a conspiracy to steal from online trading accounts at Scottrade, E-Trade, Fidelity, Schwab and other brokerage firms. First, members of the conspiracy 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 charge 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. For example, in one instance, members of the conspiracy caused the victims' accounts to sell options contracts to the Profit Accounts. Then, they purchased the same contracts minutes later for many times the price.

Murmylyuk admitted that he recruited foreign nationals visiting, studying and living in the United States to open bank accounts into which illegal proceeds could be deposited. Murmylyuk and his 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of the sham trades to be transferred from the Profit Accounts into those accounts, where the stolen money could be withdrawn.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, E-Trade, Fidelity, Schwab and other affected brokerage firms of approximately $1 million.

The charge to which Murmylyuk pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for Nov. 12.