Major Fraud Ring Busted in Largest Chinese Cybercrime Operation

Yesterday Taiwanese Criminal Investigation Bureau Commissioner Lin Teh-hua announced the largest cybercrime operation in the history of his organization. (The Criminal Investigation Bureau's report, in Chinese, is here). 548 Taiwanese police officers and 2,720 Chinese police officers took part in the operation which resulted in 450 fraudsters being arrested throughout Taiwan and in the Chinese provinces of Fujian, Huanan, Hubei, Anhui, Guangdong and Guangxi. After a joint operations agreement was signed between Chinese and Taiwanese authorities, more than 16 joint raids have been conducted leading to more than 1,000 arrests.

In this case, the activity particularly focused on telephone fraud and internet auction fraud. The arrests come close on the heels of the break up of a similar fraud ring in Ho Chi Minh City where 99 fraudsters from Taiwan and China were arrested. In the Vietnamese fraud, where 76 Taiwanese and 23 Chinese citizens were arrested, fraudsters would take over entire hotels, booking as many as 30 to 40 hotel rooms for their fraud. They would place randome phone calls, posing as telecom officials, police officers, or prosecutors, and urge people to wire money to specified accounts. Some individuals lost millions of dollars in that fraud. The Ho Chi Minh case made note that on July 1st there had been a related raid where 32 Taiwanese and 14 Chinese were arrested. Major General Huynh Huu Chien of the Ministry of Public Security called it the largest foreign hacker ring ever in Vietnam, saying that they also had been doing ATM fraud, hacking into foreign banks and using ATM card readers to steal from more than 200 foreign bank accounts and financial institutions.

The Vietnam case continued on August 13th, when police arrested eleven Taiwanese men and two women in Can Tho. In that case, the police seized laptops, phones, walkie-talkies, and most intriguingly more than 50 "fraud scripts" that guided the fraudsters through the "play" of imitating a police officer or state agency official in order to further their fraud.

The Taiwanese-Chinese arrests this week seem to be more of the same, as police explain that the groups formed temporary "Telephone Fraud Centers" where the scammers placed calls following elaborate scripts that helped them to perpetrate their frauds. In Taiwan, in addition to the seizure of laptops, cell phones, and fraud manuals, fake courier uniforms were found.

This raid began to be built after a large meeting in China's Fujian Province where police from across China came together in Ningde to address illegal telecom operations, money laundering, impersonation of public agencies for fraud, and online shopping scams, but the case actually originated with the arrest of "Rong Yu" who was arrested back in April when police discovered he had been operating a fraud from the Taizhong Emperor Hotel, pretending to be a Shen Fuwen law clerk. By tracing the criminal contacts of this phony law clerk, more than seven other similar groups were identified, including the identification of the group's headquarters in Hunan Province.

The group was also found to be related to a fake online auction group - the Wuhan Pride network (www.dey100.com). This group, which claimed to be an online trading company, was involved in both the sale of goods that were never actually delivered, but also ATM fraud conducted after stealing banking information from the buyers of those fake goods! Some of the victims report getting very strange deliveries, such as ordering goods online and receiving an empty CD box or a package of soap instead of what they ordered. When they called to complain, this allowed the fraudsters to gather additional personal information about them that allowed further fraud to occur.

I hope more details of this fraud will be revealed in the next few days, but for now, I want to offer congratulations to the investigators who are helping to clean up online crime throughout China and Taiwan!