Posted by by Pete Barlas on
In January, Miskell, a supervisory special agent for the FBI, became the first U.S. law enforcement officer to testify in West Africa in a cyber crime case.
For Dale Miskell, cyber crime is the nasty underbelly of the Internet.
And he's seen it firsthand.
In January, Miskell, a supervisory special agent for the FBI, became the first U.S. law enforcement officer to testify in West Africa in a cyber crime case.
His case was in Nigeria, where a court found all eight defendants guilty. (This is unrelated to the infamous Nigerian scam, in which con artists used e-mail to request a few hundred bucks to bribe corrupt Nigerian officials to allow them to send some $20 million in diamonds to the person conned.)
Miskell's case is even more complex. The defendants would first steal credit card numbers online. Then they'd buy goods using the phony cards online.
Then they'd recruit people to accept delivery of the goods and reship the goods on to the con artists. Some U.S. businesses and consumers got conned, he says.
The U.S. agent led a raid in Nigeria that seized $2.5 million in phony cashier's checks and $1 million in stolen merchandise. He spent two years investigating the scam.
The Merchant Risk Council helped Miskell.
The U.S. business association provided information to the FBI about its member companies caught in the scam.
In March, the council recognized Miskell as MRC Law Enforcement Officer of the Year.
Recently, Miskell sat down with IBD to explain his work in the FBI's cyber crime unit.
IBD: How did you get involved with cyber crime?
Miskell: I was working (for the FBI) in Sacramento and we started seeing a lot of white-collar crime moving to the Internet. I started working in cyber crime in 1998.
IBD: What were some of the first scams?
Miskell: People kiting (writing bad) checks to online brokerage firms.
Back then, all these new online firms were opening up. Brick-and-mortar brokerage firms also opened online (units). And they started getting scammed.
One of the first guys I arrested got away with $450,000 online by going to all of these brokerage firms and just floating bad checks from one account to another.
IBD: Didn't the brokerages check for fraud?
Miskell: A lot of companies didn't think all of these things out when they first plugged into the Internet.
IBD: How many Internet fraud scams are there?
Miskell: You name it, they're doing it. Investment scams, advanced fee scams, misrepresentation scams, numerous auction scams, retail scams and gift card scams.
IBD: Is the problem getting worse?
Miskell: It is. Fraud complaints are going up drastically every month. (See related story, this page.)
IBD: The group in Nigeria used the reshipping scam. How does that work?
Miskell: They post an ad or (troll) chat rooms looking for a "shipping clerk" who can work at home. Some people in the chat rooms have very low self-esteem. They (the scammers) find (marks) to befriend. Most of the targets are women, often women looking for love. It's amazing what scammers can get people to do just by sending a box of candies or flowers.
The scammers meanwhile use a bad credit card to make purchases.
IBD: Where does the merchandise come from?
Miskell: The scam artists buy everything from electronic goods to vitamins from online retailers using fake or stolen credit cards. They have the goods shipped to the "shipping clerks." Then they direct the clerks to send the packages to the scam operators. The scammers even provide shipping labels online or an account number to use at FedEx or UPS.
IBD: How does the "shipping clerk" get paid?
Miskell: The scam operator calls the shipping clerk to tell them they are going to have someone else send them a cashier's check just to save time.
The "shipping clerk" gets, say, a $5,000 cashier's check. She or he is told to cash the check and keep $2,000 for his or her salary and wire the rest to the scammer.
IBD: Why a cashier's check?
Miskell: A cashier's check in the U.S. is anonymous. No one worries about it being fraudulent.
IBD: What happens then?
Miskell: About 10 days later the bank (that cashes the cashier's check) realizes the check is fraudulent. The "clerk" then owes the bank the entire $5,000.
There may be additional problems. The "shipping clerk" likely provided personal information like a Social Security number, a driver's license number and a home address when they applied for the job. The scam artists can then open up credit cards in their name and perpetuate their scam again.
IBD: But to be sure, the "shipping clerks" aren't accomplices?
Miskell: They don't know anything. Then, 30 or 60 days later, law enforcement calls them to say a retailer has made a complaint that $200, or whatever, worth of stuff has been sent to a "clerk's" address using stolen or phony credit cards.
The online retailers are out hundreds or thousands of dollars' worth of merchandise.
IBD: Why do people send packages to Africa for someone they don't know?
Miskell: It's all about love. The victim is smitten with this person (they met in the chat room). They don't think anything about it when their new friend asks them to send goods to them. They tell them, "The retail companies won't ship to me (because I live in West Africa)." Or they say, "I need to save money on customs." Many of the female victims believe they will eventually marry the new "boyfriend."
IBD: How did you track these fraud artists down in West Africa?
Miskell: We followed the products. The MRC's members helped us identify the packages being sent over there.
IBD: How many victims fell for the scam?
Miskell: We found 1,500 people (in the U.S.) in a 90-day period shipping stuff in this Nigerian scam. And thousands of companies, from mom and pops to large chain stores, also got victimized.
IBD: Were the Nigerian scammers tech experts or members of organized crime?
Miskell: They were just average citizens who knew a bit about the Internet. Some were college students. Some were not. A few were friends.
IBD: Did they work in an office?
Miskell: No. They used an Internet cafe. They rented a row of computers so the guys could walk in and start working.
IBD: Did they use a warehouse?
Miskell: Nothing that big. They had stuff hidden in attics and closets. They moved stuff quickly.
IBD: Where are these eight defendants now?
Miskell: In jail waiting for their sentencing hearing.
IBD: In the past, the Nigerian government hasn't been too helpful in pursuing scammers. What's changed?
Miskell: The government became concerned that Nigeria was becoming synonymous with fraud. It was hurting their legitimate businesses. So they created a new law enforcement agency to arrest these people.
IBD: What was it like to testify in a Nigerian trial?
Miskell: Four cops acted as my bodyguards for two weeks while I was testifying. I stayed in a secure facility and I traveled in a heavily armored (Chevy) Suburban.
IBD: Why such protection?
Miskell: Sometimes witnesses don't show up (in court) because they are intimidated or threatened. The government didn't want to take any chances.