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Charges Filed: Day Trader Allegedly Used Bitcoin to Hide Fraudulent Proceeds

Last Updated March 4, 2021 5:01 PM
Sonny Axis
Last Updated March 4, 2021 5:01 PM

Joseph P. Willner, a 42-year-old resident of Ambler, Pennsylvania, was allegedly indicted on a four-count charge by a federal grand jury in the Eastern District of New York.

The self-proclaimed day trader was charged  with Conspiracy to Commit Wire Fraud, Conspiracy to Commit Securities Fraud and Computer Intrusion, Security Fraud and Conspiracy to Commit Money Laundering as contained in the court filings. Between September 2014 and May 2017, Willner is allegedly to have engaged in an illegal brokerage account takeover and unauthorized trading scheme in concert with co-conspirators. The co-conspirators allegedly hacked into the victims’ accounts in order to execute fraudulent short sales.

Willner was said to have either directly or indirectly accessed at least 110 brokerage accounts to perpetrate his scheme without authorization. Both Willner and his accomplice were alleged to have equally shared the proceeds from the scheme. These proceeds of profitable trades were allegedly laundered through a digital currency exchange, swapping United States dollars to bitcoin.

“This case involves a 21st Century cyber boiler room, except the buyers were not even aware they were purchasing shares of stock,” stated FBI Assistant Director-in-Charge Sweeney.  “As alleged, the scheme involved hacking into victims’ online securities brokerage accounts to make unauthorized trades that would benefit the defendant through the use of short sales.  The scheme ultimately led to a loss of over $2 million to victim accounts.”

During the alleged period, he is said to have accessed hacked brokerage accounts to trade the same securities, generating profits by taking advantage of the artificial stock prices that resulted from the unauthorized trades placed in the victims’ accounts. His modus operandi was to use the periods before or after regular market hours, that is between 9:30 a.m ET (representing the open market hour) to 4:00 p.m ET (the market close hour) Monday through Friday to execute the illicit trades.

It was observed that public traded stocks generally trade less frequently in pre-market and after-hours trading and may be more susceptible to rapidly fluctuating prices. Willner must have targeted this anomaly and took advantage of it to further his scheme through coordinated trading of artificial high and low prices. The Securities and Exchange Commission further reported that Willner must have generated over $700,000 in illicit profits in his name through the scheme, by buying or selling stock in the victims’ accounts using artificially low or high prices generated by the unauthorized trading of stock in the accounts.

By manipulation of market and trading structures through “short sale”, Willner’s alleged actions violated all four-counts and charge against him.

It was also observed that his communications with his alleged accomplice(s) were through the use of online direct messaging applications to exchange information in furtherance to the scheme. They used disguised pseudonyms as identities. The coordinated attacks were done in synchronicity as Willner operated his own accounts as the perpetuator while his accomplice held victims accounts in lieu. These cyber-attacks were done consistently during the relevant periods over the course of the entire operation.

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