Brokerage Hacker Pleads Guilty in Omaha

It’s known as a “pump-and-dump” scheme – a plot that involved perpetrators breaking into U.S. brokerage accounts and purchasing large batches of thinly traded securities in other people’s names, thus jacking up their prices (the pump), before unloading their own fraudulently inflated investment holdings onto an unsuspecting public (the dump).

Actually, let’s call that a “hack, pump-and-dump” as it pertains to the case of Marimuthu, the 35-year-old Chennai, India man who pleaded guilty last week in an Omaha federal courtroom to charges including securities fraud and identity theft. That would more accurately categorize the technological aspect of he and his associates’ reported criminal activities.


According to PCWorld.com, Marimuthu and others worked out of Thailand and India, conducting their scam between February and December 2006. They hacked into accounts at nine U.S. brokerages, including the Omaha-based TD Ameritrade, and made “large, unauthorized purchases” in the names of unsuspecting customers, Times of India writes. The end-goal, according to media accounts, was to inflate prices so they could sell their own holdings at a greater profit. According to DOJ reports cited in the media, at least 95 victims have been identified.


The good news is that Marimuthu, who was arrested in Hong Kong and extradited to the U.S., faces up to seven years in prison and a fine of $500,000. Sentencing is scheduled for April 26, PCWorld.com reports. Meanwhile, co-defendant Thirugnanam Ramanathan, 37, pleaded guilty back on June 2, 2008, to one count of conspiracy to commit wire fraud, securities fraud, computer fraud and aggravated identity theft after also having been arrested in Hong Kong, extradited to the U.S., and sentenced to two years in prison in a Nebraska court.

International cases can often pose logistical difficulties for U.S. fraud investigators, who must secure the cooperation of officials abroad when tracking down faraway suspects.  So it’s heartening that they have made headway on this particular case.

There is, however, apparently still work to be done: One suspect charged with various related crimes still remains at large.