U.K., Russia break up online extortion ring

Law enforcement officials in the U.K. and Russia have cracked down on a major extortion ring accused of prying hundreds of thousands of dollars from online sports betting Web sites, according to a statement from the U.K.’s National Hi-Tech Crime Unit.

Three men, ages 21, 22 and 24, were taken into custody on Tuesday in separate arrests in St. Petersburg, Russia, and the Saratov and Stavropol regions of southwest Russia. The men have not been charged, but are believed to be part of a ring that uses legions of compromised or “zombie” computers to launch denial of service (DoS) attacks against online sports betting parlors (“sports books”) that refuse to pay protection money, said Felicity Bull, a spokeswoman for the National Hi-Tech Crime Unit (NHTCU).

In DoS attacks, Web servers are flooded with junk data and network traffic from thousands of machines, preventing them from responding to legitimate requests.

The NHTCU, a law enforcement agency that investigates U.K. computer crime, worked with their counterparts in the Russian Ministry of Internal Affairs (MVD), including the MVD’s computer crimes specialist department and Investigative Committee, according to a NHTCU statement.

The arrests on Tuesday follow a complaint in October 2003, by Canbet Sports Bookmakers UK Ltd., which was forced to pay protection money to prevent its Web site from being attacked, Bull said.

NHTCU and Russian investigators used traditional investigative techniques and computer forensics to trace the extortionists back to Russia and identify them, using information on the source of the DoS attacks and money transfer records. Authorities arrested 10 members of the online extortion gang in Riga, Latvia in November 2003. Those arrests led to the men in Russia, Bull said.

Money transfer agencies helped the NHTCU track the funds, and law enforcement agencies in Australia, Canada, Estonia and the U.S. aided in the investigation, the NHTCU said in a statement.

Authorities believe that organized criminal groups in Russia and other countries run the extortion ring. However, Bull noted that the three men arrested have not yet been charged, that the investigation is continuing and that more arrests are possible. Russian investigators seized computer equipment from the men, which may provide further clues about the criminal gang, she said.

Authorities still do not know how much money the group collected from sports books — though the figure is believed to be in the hundreds of thousands of dollars — or how many sports books it extorted, Bull said. Online sportsbooks use sophisticated Web pages to post odds and collect wagers on a wide range of sporting events. Online sports wagering is illegal in the U.S., but legal in the U.K. and other countries.

In the last year, online sports books have become frequent targets of online criminal gangs that are attracted to the cash-rich virtual betting parlors, which often keep between US$300 million and US$400 million on hand to cover bets, according to Dave Matthews, site administrator of Las Vegas Advisor, an online publication serving the gaming industry.

Demands for protection money vary, but typically range from US$10,000 for small sites to US$40,000 or more for larger operations, said Amran Pena, an information technology consultant in San Jose, Costa Rica, who works with online sports books to secure their networks.

Many online sports books that serve the U.S. are based in small countries such as Costa Rica and Belize, which lack the resources or expertise to investigate extortion attempts.

If charged, the three men will be tried in Russia. NHTCU also expect more arrests to follow, Bull said.

“We expect to find more people in the chain. Once you arrest somebody, you start to find out so much more,” she said.

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