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Two Connecticut men have been charged federally in connection with a multi-million dollar fraud scheme that targets FanDuel.
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With the use of theft of personal details, the two took advantage of promotional bonuses and opened fake betting accounts at FanDuel.
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The operation was able to defraud FanDuel out of roughly $3 million over the course of many years until the time law enforcement shut it down.
Federal authorities arrested two men from Connecticut, charging them with orchestrating an elaborate scheme that stole over $3 million from FanDuel and other online betting sites.
These alleged fraudsters utilized stolen identities from the dark web, multiple dark web marketplaces, and loopholes created by promotional offers to be able to place bets using other people’s money.
Dark Web Shopping Spree Fuels Fraud Ring
A prosecutor from Connecticut announced last week that prosecutors have charged the suspect with various offenses. Their charges are an indictment of 45 distinct counts for committing a multitude of crimes: fraud, identity theft, and money laundering.
The allegations allege the scam commenced in 2021. Allegedly, the two hackers were sourcing their 3000 + stolen identities from the “dark web” through accessing websites on the messaging app Telegram.
Their alleged shopping spree represents just a minuscule fraction of the stolen personal data circulating online, dwarfed by massive national-scale breaches that have made the personal information of hundreds of millions of people available for purchase on these same criminal marketplaces.
Previous to purchasing stolen identities, however, they had specifically targeted individuals with a full range of identity information, e.g., full name, address, birthdate, and Social Security number, before making their purchases.
The evidence from investigators further supports their claim, as they were still using online subscription services to run background checks on their victims, so the hackers had a much broader range of personal identity information to utilize.
This extra information helped them breeze through verification questions when opening accounts at FanDuel and other betting platforms. With thousands of fake accounts in hand, the defendants allegedly began claiming promotional bonuses.
Many online sports betting apps will give new customers free bets or a deposit match to generate the maximum amount of revenue possible. Kapoor and Lillaney took advantage of these bonuses over multiple transactions by creating thousands of fake identities.
How the Money Moved
Once the bonuses paid off, the suspects funneled the winnings into virtual stored-value cards that FanDuel allowed account holders to use. From there, prosecutors say Kapoor and Lillaney transferred the funds into bank accounts and investment accounts under their control. The operation is so massive that it reportedly generated over $3 million in illicit profits over several years.
Victims whose identities these suspects stole could face damaged credit, frozen accounts, and hours of effort trying to fix the financial chaos left in the wake of the theft.
U.S. Attorney David Sullivan of Connecticut clearly states that those involved in these types of crimes should expect stiff consequences. He stated that the defendants are alleged to have opened many online gambling accounts using thousands of stolen identities and have exploited the incentives for new account holders as well.
According to Sullivan, this allowed them to wager with money that wasn’t theirs for years. But their run is now finished. He thanked the IRS Criminal Investigation team and Connecticut’s Department of Consumer Protection for their investigative work.
He also noted that investigators continue working to identify all the victims harmed by this criminal activity.
Identity Theft’s Lasting Impact
Thomas Demeo leads the IRS Criminal Investigation and emphasized the severity of identity theft at this magnitude. He said those charged deserve full prosecution under the law. Demeo observed that the supposed scheme has caused tremendous distress to victims of identity theft.
This case underscores a pervasive national threat, as certain U.S. states exhibit significantly higher vulnerability to such identity fraud and cybercrime due to factors like digital adoption rates, existing fraud rates, and law enforcement resources.
He stated that the Criminal Investigation Division of the IRS will continue its efforts to sort through these complex financial transactions and money laundering schemes in which criminal organizations attempt to hide their source of funds.
Authorities arrested Kapoor and Lillaney on Friday, February 6, 2016; they posted a total bond of $300,000. If convicted, they’ll face a very long legal battle that attracts major monetary fines or even jail sentences.
This case shows just how fast a criminal can make the most out of the stolen ID of a person. Dark web marketplaces make buying personal information disturbingly simple.
Even though the law allows certain websites to check user background, bad actors can misuse it for auto-fill purposes. And promotional offers designed to attract new customers can become tools for massive fraud when combined with stolen identities.
