“Crime expands to fill the space available” should be a well-known epithet: Evidence it’s true is revealed in news that social networking phenomena Facebook and Twitter were used in a classic stock fraud trick.
The two-year investigation of a cocaine-trafficking crime involving $34 million worth of the drug being smuggled through the Port of New York also uncovered something unexpected–a $7 million pump-and-dump stock fraud.
The trick this time, according to the Manhattan U.S. Attorney’s office, is that instead of word-of-mouth “pumping” statements, cold calls or subtle manipulation of traditional media, the Web–and social media sites in particular–were used to spread misleading statements and “defraud the investing public.” The 11 fraudsters used more than 15 different websites and managed to accrue over $3 million in profit while fleecing the public for $7 million. Facebook pages and misleading Twitter statuses played a key role.
This new type of “wire fraud” is inevitable, and Facebook and Twitter (along with blogs and other social media services) are absolutely perfect vehicles for criminals to use to disseminate misleading stock information. This is because they’re communications systems that rapidly spread messages from one to many (Twitter almost exclusively so, and Facebook increasingly so as it pushes toward public-accessible statuses), and their design means they don’t necessarily have to give away personal information about the sources of stock rumors. Expect cybercrimes like this one to only get more common.
And Facebook’s also in the news at the moment because notorious spammer Adam Guerbuez is refusing to pay the $873 million fine that a Canadian court levied against him for sending over 4 million spam messages over Facebook (the classic type, offering penis enlargements and drugs). Guerbuez used various tricks to pull the scam off, including phishing for user’s passwords, and an appeals court recently upheld the charges against him for the crime. Guerbuez doesn’t see himself as a criminal though, and as well as declaring his business bankrupt so he won’t have to pay the fines, he’s noted he’s hoping to profit on his notoriety with a book or movie deal.
Image via Wikimedia user agptvr.
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