John Marsh 
Updated July 18th, 2019
A resident of New Haven, Connecticut, was arrested and sentenced to 366 days imprisonment for carrying out a phishing scam involving bitcoin accounts of darknet users. The case was announced after his arrest by Patricia Ferrick, a special agent in charge of the New Haven FBI Division, and Deirdre Daly, State Attorney of the District of Connecticut.
37-year-old Michael Richo created fake links that would direct users to his website that very much resembled genuine darknet market websites. After they logged in to their accounts, their passwords would be sent back to Richo who would save them on his computer.
He would then access their bitcoin accounts and monitor their transactions. Once a deposit was made, he would send the coins to his own bitcoin wallet before the legitimate account owner had the time to use or withdraw them. Other times he would trade the bitcoin for fiat currency then deposit the money to bank accounts under his name or make the money available to himself through Western Union and MoneyGram or through debit cards such as Green Dot cards. Authorities report that he stole cryptocurrency worth over $350,000 using more than 10,000 stolen login information.
His arrest came after a complaint was filed against him to the local authorities. Following investigations, Richo was arrested after he was caught red-handed performing his criminal activities. He was arraigned in a New Haven court where he was prosecuted by Neeraj Patel, an assistant state attorney. Richo was charged with identity theft, computer fraud, wire fraud, and money laundering.
As per federal authorities, at the time, Richo was due to be sentenced to up to 57 years in jail if found guilty of all charges against him. A few hours later, the proceedings came to an end, and he was released following a bond application of $100,000.
Sometime later, he was re-arrested and arraigned before a New Haven magistrate where he was sentenced to 366 days behind bars. The judge also ruled that following his release, Richo is to be put on monitored release for a period of three years. Following a court order, Richo had to forfeit all the money he obtained through the phishing activity. Other items he possessed that were also seized include electronic gadgets and various expensive metals and coins that he bought using the stolen money.
This is not the first time that Richo has found himself in trouble with law enforcement. Back in October 2016, federal authorities received a complaint against him after which he was arrested. A few months later, he confessed to fraud and money laundering and was convicted of the offenses.
This is one among multiple cases where people have been robbed of cryptocurrency through online scams. Various law enforcement agencies, including J-CODE, the Drug Enforcement Agency, and the Department of Defense, have cooperated with the Department of Justice in efforts to bring down darknet cybercriminals.
Early this year, the federal grand jury dealt with a cryptocurrency related darknet case which happened to be the very first case handled by the Department of Justice. The case involved a trio from New York who were accused of carrying out an illegal bitcoin transmitting business.
They were also charged with conspiracy to perform money laundering and performing transactions using illegally acquired money, among other charges. Two of the three were handed the maximum possible penalty for the offense.
Recently, the FBI reported that it had seized cryptocurrency worth over $4 million from online criminals following a series of investigations. The investigations were carried out by Operation SaboTor (Sabotage Tor) led by the Joint Criminal Opioid and Darknet Enforcement team (J-CODE).
Over sixty arrests were made and fifty darknet accounts used to carry out the scams closed down. Other items seized during the operation included drugs weighing 300kg, 51 guns, cryptocurrency worth over $4.5 million, gold worth $40,000, and over 2 million in cash.
Another similar incident was reported in Canada by Hard Fork just a few months ago. Following court proceedings, law enforcement officials were ordered to confiscate bitcoin worth $1.4 million said to be the proceeds from the drug dealer’s phishing activities.
Internet users have been warned of the increase in scams put up on the internet as legitimate sites. Authorities have also urged users to report any unauthorized transactions on their accounts promptly.
