Original URL: http://www.theregister.co.uk/2007/11/08/ebay_victims_track_their_mules/

Ukrainian eBay scam turns Down Syndrome man into cash machine

'How a mule made an ass of me'

By Dan Goodin

Posted in Security, 8th November 2007 22:58 GMT

Exclusive In late September, Mark Hartman received an email from eBay's Trust and Safety department informing him that his bid on a high-end road bike had been canceled because the auction was suspected to be fraudulent. There was only one problem: He had already mailed a cashiers check for for more than $1,500 to a man 2,300 miles away.

"I had a sinking feeling after I got the email that if I didn't intercept [the check] in this person's hands I'd never see it again," said Hartman, who lives in Sammamish, Washington. "I'm the type of person who does not like to be duped."

Hartman soon realized he was on the losing end of a scam that plays out regularly at the online auction house. In it, eBay accounts with immaculate user feedback scores are hijacked by overseas con artists who figure out a way to crack the user's password. The scammers then fleece unsuspecting buyers with sham auctions for cars, exercise equipment and other pricey merchandise.

Frequently, there is little victims can do once they realize they've been cheated. After all, eBay takes no responsibility for most transactions unless they are paid using PayPal. What's more, the masterminds of the scam are usually situated in Eastern Europe or some other far-off location.

Hartman, however, experienced a rare bit of luck after quickly recognizing the scheme's weak spot: He had the name and address of the person who was to receive his payment. So he called the local postmaster and sheriff's department for Ben Wheeler, the East Texas hamlet where his cashier's check for $1,536.51 had been delivered. He explained he had sent the payment to a town resident and only later learned the sale was fraudulent. Within a few hours, he received the phone call he had been dying to get.

Portrait of Mark Hartman

Mark Hartman

"I'm in Joseph's house right now, and I have your check in my hand," Hartman recalls being told by a local sheriff's deputy. A few days later, Hartman had the cashier's check returned to him.

Joseph and the amazing techno-slavic dream scam

"Joseph" was the first name of the man Hartman believed was selling the carbon-black, 52-centimeter Specialized Roubaix bicycle and to whom Hartman had addressed the cashiers check. It turned out the man really did exist, and according to Lester Alexander, a captain with the Van Zandt County Sheriff's Office, he lived in a mobile home next to his parents. Alexander soon discovered Joseph had Down Syndrome, a genetic disorder that often results in diminished cognitive abilities.

"I knew right off this guy wasn't selling $1,500 bicycles," Alexander told The Register. "It was obvious there was something not quite right. The young man had no idea what he was supposedly selling and taking money for."

According to Alexander, Joseph (The Register is withholding his last name) came about his job by answering an ad offering home-based work. To apply, he had to provide detailed information about himself and copies of his drivers license and a recent phone bill. In addition to Hartman's cashier check, Joseph had recently received a personal check for $1,735 sent by a California-based woman in a sham sale of an exercise bike.

Emails sent to Joseph's account instructed him to deposit the funds into his personal checking account. He was then to send the payments minus a $70 commission to an address in Ukraine, Alexander said.

The Golden Mule

In the shadowy world of online fraud, people like Joseph are known as mules. They shoulder the load and risk of well-concealed con artists.

"They have a lot of redundancy built into it, and they don't have anybody making a lot of money," said Ken Dunham, a fraud buster at iSight Partners who has been doing mule investigations since 2004. "It's a perfect type of setup to make it difficult to hunt down the kingpins behind these laundering schemes."

Indeed, other people bitten by eBay fraud have been met with considerably less success when pursuing the mules who played a hand in scamming them. But that hasn't stopped them from trying.

Liddy's lost liberty

After Yvonne Liddy, for instance, recently lost $8,650 in a sham listing for a 2005 Jeep Liberty, she spent hours tracking down the Alhambra, California-based woman she paid through a bank-to-bank transfer. After finally locating a cell phone number for the mule, Liddy called and confronted her.

"She started freaking out and gave me everything," Liddy said of the mule. "She gave me the password to her email so I could take whatever I wanted."

The emails, combined with Liddy's account of her conversations with the mule, give plenty of details about how the scheme worked. The mule, a newly married 21-year-old, had payments deposited directly into a Washington Mutual Bank account, which she kept in her maiden name. The mule was then instructed to send payments through Western Union to individuals in Greece.

Payments were to be broken up into chunks no larger than $3,000, to get around certain Western Union restrictions. Sometimes she had to travel to three separate Western Union locations and make payments at each one, according to the emails, which were reviewed by The Register.

Can't touch this

The emails suggest she helped funnel $34,450 between September 27 and October 12 from four separate individuals, one of them being Liddy, though it's unclear if all four transactions went through as described in the messages.

The emails gave the mule one of two options for being paid: either deduct 6 percent of the funds immediately or wire the total amount and receive a check for 10 percent later. However, the emails indicate that the mule had trouble getting her bosses to pay as promised.

"It would appear there was a slight delay to the first check, and it would be fair to compensate you," someone going by the name of Johen wrote in one message before going on to promise a check would be forthcoming. "That's the best I can do right now," Johen continued. "You've always responded promptly to my requests and I appreciate that."

Liddy's pursuit, while providing a rare glimpse into the world of online graft, has done little to help her recover the money she lost. She considered taking the mule to small claims court, but is reluctant to spend money traveling from Ohio.

"I'm at a standstill, I guess," she said. "I called a couple lawyers and no one even wanted to touch the case."

'It's eating me alive'

Hartman, the eBay buyer who got his cashiers check back, said its crucial for victims of fraud on eBay to take swift action because site representatives are of little help.

"You cannot count on eBay to straighten it out for you," he said. "If you want your money back, they're just not going to do anything to assist you."

The flip-side of that coin, however, is being powerless to pursue a person who played a key role in the theft of thousands of dollars, says Chuck Pflugmacher, an Illinois resident who lost $17,900 in a recent fraudulent eBay auction for a 2005 Toyota Tacoma.

"It's eating me alive," said Pflugmacher, who said he spent hours trying to unsuccessfully locate the Las Vegas-based mule. "It's frustrating not being able to contact her personally. I try not to stew over it because it's not going to do me any good." ®