In recent years, the mad rush to the stock market, combined with the explosion of online trading, has lured millions into financial waters once considered too hazardous for anyone but experienced brokers. This frenzied democratization has delivered a deluge of fresh, uninformed investors, primed for the attentions of unscrupulous traders and various charlatans. And when investigators step in, the fact that many of the most dubious transactions happen over the Internet often means a lot more work — officials can follow millions of false leads over countless state lines before connecting an online presence with a human being. "These prosecutors have identified an incredibly widespread crime syndicate, reaching from New York to Dallas to Salt Lake City," says TIME senior New York correspondent William Dowell. "And it looks like it's been simmering for quite a while." The sheer magnitude of the coalition was just one of the challenges facing law enforcement officers; various state attorneys general were stymied, says Dowell, trying to negotiate the perpetually hazy realm of online jurisdiction.
Made for Each Other: The Mob and the Internet
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On the Internet, no one knows you're a... criminal. And that mantra, it seems, has been followed by some of the wise guys more used to the ways of shakedowns and loansharking. In a crackdown authorities are calling the largest in U.S. history, 120 people, including alleged members and intimates of New York's five major organized crime families, were charged Wednesday with securities fraud. The defendants are said to have defrauded investors out of at least $50 million over five years, often using the Internet to hype falsified and/or inflated stocks. The charges, filed in U.S. District Court in Manhattan, included 16 indictments and seven criminal complaints, and targeted a dazzling array of stockbrokers and fund managers; a former New York City police detective and various corporate insiders were also named.