Israeli Online Casino Owners Arrested For Multi-million Dollar Fraud

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Monday, August 3rd, 2015 | Written by Stephen Smith

At the end of July, four men were arrested in Israel and Florida accused of orchestrating a “pump-and-dump” scheme involving penny stocks and Bitcoins which is believed to have netted them millions of dollars. The fraudulent investments were offered to people across three continents, including Israel, Cyprus, and Russia, with the money laundered and channeled to a shell company based on the Mediterranean island of Cyprus. As stated on the FBI website:

“As alleged, the defendants manipulated trading in U.S. securities from overseas, using fake identities to funnel millions of dollars in unlawful proceeds through a web of international shell companies. Using false and misleading spam e-mails sent to millions of people, these defendants allegedly directed their pump-and-dump scheme from their computers halfway around the world.”

Florida Connection

Two of the men were arrested in Florida, namely Anthony Murgio and Yuri Lebedev, both of whom according to their LinkedIn pages had previously attended Florida State University. They have subsequently been charged with operating an illegal money transmitting business which converted Bitcoins into cash for their criminal enterprise, but they also face further charges in connection with their suspected involvement in the theft of data of 76 million households from JPMorgan Chase last year.

JPMorgan Hack

Authorities suspect that the JPMorgan hack may have been done to further the penny stocks scheme, and the FBI is now hoping the charges against Murgio and Lebedev will encourage them to “flip and.. maybe start having the conversation about JPMorgan.” Last year’s attack on JPMorgan made all the headlines, not just because of the millions of people affected by the data theft, but also because of the suspicion it had been the work of Russian gangs, possibly working on the instruction of a Russian government agency. That has now been dismissed. Nevertheless, the hack was made possible by breaching JPMorgan’s own network, despite the $250 million it spends each year on online security, with the FBI having made the breech an urgent investigation because of banking’s importance to the country’s financial system.

Arrests In Israel

Meanwhile, charges have been brought against the men’s co-conspirators in Israel, Gerry Shalon and Ziv Orenstein, who owned 13 online gambling sites between them, including Begado, Casino Titan, Classy Coin, Golden Cherry, Grand Macao, Grand Parker, Jackpot Grand, Loco Panda, On Bling, Ruby Royal, Slots Jungle, Slots of Fortune, and WinPalace. These sites were operated under two affiliate programs, namely The Affactive Group, and The Revenue Jet Group, both of whom “have been in our Rogue Pit for years”, according to Bryan Bailey from CasinoMeister, a casino watchdog site. Elaborating further, Tom Galanis, director of industry marketing agency GameOn, explained:

“There has long been widespread suspicion over the activities of this group of casinos, from DDOS attacks on competition, to screwing players on withdrawals to shaving affiliate earnings. Those are all unproven, but the charges against the ownership would indicate that there is certainly no smoke without fire.”

Affiliate marketers for the group now stand to lose a lot of money, and have already had their accounts and payments frozen, and their associated operations closed. It is worth mentioning that the damaging situation is no fault of their own, and that they are simply suffering the fallout caused by the FBI’s international investigation.

Frontman On The Run

A fifth man, an American citizen by the name of Joshua Samuel Aaron, is currently still at large, with his apparent role in the scheme that of “pump-and-dump” frontman, who communicated with US stock promoters using the alias “Mike Shields”.

Extradition To The USA

Together, Shalon, Aaron, Orenstein stand accused of the following crimes; conspiracy to commit securities fraud, wire fraud, identification document fraud, aggravated identity theft, and money laundering. According to a FBI press release:

“Since 2011, Shalon, Aaron, Orenstein, and their co-conspirators have orchestrated multi-million dollar stock manipulation–or “pump and dump”–schemes to manipulate the price and trading volume of numerous publicly traded microcap stocks in order to enable members of the conspiracy to sell their holdings in those stocks at artificially inflated prices.”

The FBI’s next step is to have the men extradited to the United States, where they can then testify against one another, rather than allowing them to be tried in separate countries where they could then shift the blame onto overseas defendants. Whether Israel will agree to extradite them, however, remains to be seen.