Massive fraud scheme has Buffalo ties

BUFFALO, N.Y. (WIVB) — There is a Buffalo connection to one of the biggest busts in the country for financial internet crimes.

Indictments were announced Wednesday for 20 people in northeast Ohio for their roles in a massive conspiracy to hack into the finances of unsuspecting victims — many of them businesses — to steal millions of dollars.

An investigation that began in 2015 in Western New York turned out to be among the first of many dominoes to fall.

Federal authorities in northeast Ohio on Wednesday announced they had broken up a complex and somewhat sophisticated crime ring, responsible for stealing at least $16 million from victims all across the country.

The organization had grown so large, it spanned the U.S., Canada and parts of Africa.

In 2015, Special Agent Kevin Parker, of the Buffalo division of the FBI, began investigating Paul Lacey, from Youngstown, Ohio, for his role in the theft of $250,000 from a small law firm in Dansville, NY.

Parker said the agency isn’t fully aware of what the money was ultimately funding, other than the “furtherance of this scheme and others.”

In this case, Lacey acted as a low-level middleman for the Youngstown organization. Lacey worked on the financial side of the scheme, after others hacked into the lawfirm’s system, and diverted money into accounts Lacey set up himself.

“Paul was simply used as an individual in furtherance of moving the money from the victim to other fraudulent accounts for whatever fraudulent uses it would be,” Parker said.

The accounts were real, and Lacey used his real name and other identification to create them, Parker said.

“He would move that money in different chunks to other co-conspirators,” Parker said.

The investigation didn’t stop for Parker once Lacey was off the streets.

Parker came to realize this crime ring had a multitude of layers. And information other law enforcement agencies — including other FBI field offices — would receive from Park would be critical to the broader investigation.

“Once we got tied into Tampa and Toronto, we began to understand the larger picture,” Parker said. “Then we begin to make connections between other offices and identify the larger conspiracy for what it is.

“That doesn’t happen if it’s just Buffalo or if it’s just Cleveland or if it’s just Tampa,” he added.

Business email compromises such as this accounted for the biggest financial losses in all of 2016 for cyber schemes, according to data provided by the FBI.

Each of the 20 indicted are charged with one count of conspiracy to commit wire fraud and bank fraud and one count of conspiracy to commit money laundering.

The FBI said the suspects established shell companies and business bank accounts, which received and laundered at least $16 million obtained through various fraud schemes.

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