The current online gambling prohibition in the majority of The United States is believed to push American players toward illegal offshore operators, which leaves them defenceless and wide open to predatory outfits. A prime example of this were the affiliate programs Affactive and Revenuejets, which included online casino brands like Classy Coin, Grand Macao, Grand Parker, Jackpot Grand, Loco Panda, OnBling, Ruby Royal and Slots of Fortune. Israeli Gery Shalon of the Republic of Georgia, along with Joshua Samuel Aaron and Ziv Orenstein, was arrested in July and believed to be tied to these brands. The casinos have subsequently closed but US authorities discovered that there is much more to the 31-year-old than the illegal casino operations.
The Beginning
Shalon is the man behind a series of scams, system hacks and data thefts, which began in 2007 with online casinos. The US Department of Justice released his indictment to the public. It noted the numerous online casinos run by his group of 270 employees located in Hungary and Ukraine and the millions of dollars they generated. Players and affiliates had frequent complaints when it came to casinos associated with Shalon. His organization has even been accused of spamming and initiating DDoS attacks on competition and even affiliate sites publishing negative reviews or comments regarding the casino brands.
In addition to illegal gambling operations, Shalon built an empire using his hacking skills based on pump-and-dump stock schemes, credit card fraud and several other areas of crime that he could syphon money from.
Affiliate Guard Dog is a trusted online resource for casino affiliates. They keep a keen eye on affiliate programs and host an online forum where members can discuss issues. The nonpayment complaint topics flooded the forum with regard to the casinos associated with Shalon’s affiliate programs. The same rang true on affiliate forums where online gamblers reported problems.
The sites accepted American players, which in general can be a red flag as many trustworthy operators can be hard to come by. Regulated regions have the ability to fine and shut down licensed operators while those offshore unlicensed operators take the money and run as there is no recourse for players in these regions. For a list of licensed online casinos visit Casinos Lijst.
The recent indictment indicates that Shalon and his cybercrime team operated “at least 12” illegal online casinos that targeted US players and funneled in “millions of dollars in profits per month” from 2007 right up until this year when they were apprehended. The fraudster is said to have hid away $100m in offshore accounts.
There were no limitations within this cybercrime ring as they even went so far as to attack other casino operators having hacked into their systems compromising and obtaining various data. They also used blogs to boost Affactive search rankings.
American gamblers probably noticed a high volume of emails as the group is said to have spammed “email promotions distributed on a massive scale” as noted in the indictment. Executives of major online gambling firms were targeted as well as emails were hacked and followed up DDoS attacks “in response to perceived misconduct by [the sites] directed at Shalon’s casinos.” Even software developers were at risk among Shalon’s circle as their email accounts were accessed “to ensure that the companies’ work with Shalon’s competitors did not, in Shalon’s view, compromise the success of Shalon’s unlawful internet gambling businesses.”
The indictment in its entirety is available for public viewing at www.justice.gov.
Beyond the Realm of Online Gambling
The criminal activity extended far beyond the online gambling business as Shalon took to the stock market having driven up share prices and selling them off resulting in millions of dollars in profit for his ring and millions in losses for the victims of his pump and dump stock scheme.
Additional areas targeted by the ring include construction, pharmaceuticals, shipping and trucking industries. Banking and credit card companies were another major focus for Shalon. In fact, he is known as the man behind the largest scale bank data breach having hacked into JPMorgan Chase & Co and accessing 83 million customer accounts. Fidelity Investments Ltd., E*Trade Financial Corp., Scottrade Financial Services Inc. and Dow Jones & Co also suffered at the hands of this group.
The US was an easy target for credit card fraud considering most of the world runs on a chip and pin program. America was quite late in jumping on the band wagon but such increases in fraud have changed the way debit/credit card purchases are made across The United States.
Bank Fraud Changes the Face of the US Credit Card Industry
With bank fraud on the rise in recent years and JP Morgan suffering the biggest banking data breach on record, it was inevitable that the country would beef up security and introduce the chip and pin system used throughout much of the world.
Chip and pin cards offer an additional level of security as there are microchips embedded into the plastics. They offer an additional layer of security than the previous system of reading the magnetic stripe. The chip card, also known as EMV, is used to generate a unique code each time a transaction is authorized, which increases the difficulty when attempting to produce counterfeit cards.
Retailers were given until October 2015 to convert payment systems and hardware in order to support the chip and pin cards. According to USA Today, “That’s the date by which if a merchant doesn’t have a chip terminal, and a counterfeit card is used at that location, they may be liable for that fraud on that transaction,” said Stephanie Ericksen, vice president risk products, for Visa. “We know, based on experience in other countries, it takes several years to get to critical mass. So we’re seeing Oct. 1 as more of a kickoff toward increasing the momentum toward chip. People will still be able to use their (cards with) magnetic stripes.”
Card issuers have already been sending out chip and pin cards to customers so many of you may have already activated yours or can expect to see it coming in the mail. Changing the card payment industry comes at a high price but this is likely far less than merchants and banks would stand to lose in fraud without the conversion. Hundreds of thousands of merchants have made the switch to a chip and pin system, which also required new credit card terminals.
It’s safe to say that Shalon and his hacks contributed to the need for a change to the US payment card industry.