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For this assignment you will post your answers to the questions in each thread. Use examples from the readings, or from your own research, to support your views, as appropriate. You are encouraged to conduct research and use other sources to support your answers. Be sure to list your references at the end of your post. 1. List at least 5 examples of common white collar crimes.2. Money Laundering used to be rare. Why do you think money laundering has become a common occurrence among the white collar population in the United States. Hi prof, I have attached the reading materials for this week
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Chapter 7
Organized Cybercrime
Introduction
Organized crime has captivated the American public for decades. We can see this in the movies
and television shows that act as a mirror of society. The mafia has historically attracted the
most attention with high-profile figures such as Al Capone and John Gotti becoming a part of
our national imagination and cultural products such as The Godfather and The Sopranos being
landmarks in American cinema. Beginning in the 1980s, increased rates of street crime and the
explosion of the crack epidemic placed attention on drug gangs. Like the Italian Mafia in the
mid-20th century, these street gangs, primarily black and Latino, operated through a combination of violence and corruption. The HBO series The Wire provides an example of this.
In the 21st century, organized crime is poised to take on a new look. On the one hand, you
have more traditional organized crime groups migrating some of their activities into the digital
environment. Again, we can think about movies and television shows in which organized crime
groups that traffic in drugs or prostitution have one or more technically sophisticated hackers
assisting them in their exploits. On the other hand, wholly new organized crime groups are working entirely online. These groups, because of the lack of fisticuffs, provide less fodder for action,
and may never be a common subject of movies. However, academic research suggests that these
groups are plentiful and will continue to proliferate.
This chapter explores organized crime in the digital environment. First, we define and
describe traditional organized crime and then import these understandings into the digital environment. We then explore the forms that organized crime takes in the digital environment. Like
comparisons made in previous chapters, we find both similarities and differences between the
physical and digital. In short, organized crime online is just as sophisticated as traditional organized crime, however the structure of groups is less hierarchical and more networked. We next
discuss some of the criminal activities of organized crime groups. These crimes are the same
as those covered in previous chapters—cybertrespass, cyberpornography, cyberviolence, and
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cyberdeception. However, they are done on a larger scale and with more sophistication. We use
as example the activities of the Carbanak/Cobalt Group. Finally, we discuss the key legislation used to prosecute organized cybercrime and raise questions as to the appropriateness of
these laws.
Defining and Describing
Organized Crime
There has been a debate within the social sciences about how to conceptualize organized crime.
The debate revolves around the term “organized” (Finckenauer, 2005, 64). Almost any crime can
be committed by a group of people working together as coconspirators. For example, individual
juveniles may make temporary alliances to commit an armed robbery. Or, disgruntled associates
in a retail business may work together to embezzle money. These are certainly crimes that are
organized. The offenders must coordinate their activities to attain their goals. They will have
some type of rudimentary leadership structure and assigned roles. However, their lack of sophistication and lack of permanence constrains the scale of their activities. Once the “crime that is
organized” has been committed, the group may not attempt to build on their success or further
develop their infrastructure to commit more sophisticated crimes. They are not as serious or as
disruptive to society, and do not require the type of resource-intensive investigations by federal
agencies that the Italian Mafia or MS-13 have historically called for.
In order to distinguish between crimes committed by temporary groups, and crimes committed by stable, sophisticated organizations, Hagan (2006) designates the latter as a proper
noun. We do the same here. Groups like the Italian Mafia and drug cartels are participating in
Organized Crime.
Social scientists have explored what makes a collection of individual criminals an Organized
Crime group. Finckenauer writes that a criminal organization is a social network of individuals
who vary along several dimensions (2005, 75–76). These dimensions are good starting points for
identifying Organized Crime:
•• Criminal sophistication—The degree of planning used in carrying out a crime, how
long does the commission of a criminal act take, and how much skill and knowledge is
required to carry out the crime. Consider drug trafficking, which may require coordinating the negotiation and acquisition of contraband from entities that may be outside
of the country, securing safe passage of that contraband, distributing it to sellers in the
most advantageous locations, and monitoring the sales of the sellers, all while evading law enforcement. They can also be sophisticated in the amount of technical skill
required.
•• Structure—The degree to which a division of labor defines authority and leadership,
and to which the structure maintains itself over time and across crimes. As with all large
groups, a stable group structure is needed for individuals to work together efficiently.
Organized Crime groups tend to have relatively large group structures with several levels
of authority. Consider the well-known organization of the Italian American Mafia crime
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7 Organized Cybercrime
families. Each family begins with a “Boss” or “Don” at the top who leads the organization, followed by a second in command or “Underboss.” The Don is advised by a counselor, or consiglieri, who is usually third in command. Under these leaders are “Capos”
who lead a crew of “Soldiers.” At the bottom of the organization are “Associates” who
may not be official members of the family but assist in criminal activity.
•• Self-identification—The degree to which individuals in the network see themselves as
being a part of an organization: there are examples of group connections such as use
of colors, special clothing, special language, and tattoos. The individuals in Organized
Crime groups self-identify as being members of a group. In street gangs, drug cartels,
and the mafia an erstwhile member may need to undergo some type of initiation, often
involving committing a crime of some kind. In some cases, the crime could be as serious
as committing murder. There will also be certain customs, beliefs, and argot unique to
the group that a person who identifies with this group will adopt. The colors chosen by
a gang—red for Bloods and blue for Crips—is an instance of this.
•• Authority of reputation—The degree to which the organization has the capacity to
force others to do what it dictates through fear and intimidation, without resorting to
violence. Organized Crime groups can intimidate civilians and law enforcement and
defend their zone of criminal activity through their reputation. Previous acts of violence precede Organized Crime groups, such that potential rivals, concerned citizens,
and even law enforcement are less likely to interfere with current or future crimes.
This reputation develops over time and speaks to a permanence and stability that
Organized Crime groups have, that individuals committing crimes that are organized
do not.
These dimensions are good theoretical tools for analyzing a group and determining if it can
be sufficiently categorized as an Organized Crime group. However, it is important to note that
these dimensions are only guideposts, and groups will vary in the degree to which they fall on
any given dimension. Ultimately labeling a group as an Organized Crime group is a matter of
informed judgment.
For our purposes, we will use these dimensions to construct a working definition of
Organized Crime for this chapter. Organized Crime groups are defined as hierarchical and structured organizations conducting sophisticated criminal activities in which the members develop
their own inner culture and the group develops a reputation for criminality. Our next task is to
import this definition into the digital environment and explore the ways Organized Crime is
conducted online.
The Activities of Organized
Crime in the Digital
Environment
Organized Crime can entail any of the crimes discussed within the four categories of cybertrespass, cyberpornography, cyberviolence, and cyberdeception. However, certain crimes are more
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effectively done using the infrastructure and resources of Organized Crime groups. Grabosky
(2007) discusses several of these crimes, and we highlight four of these here—digital piracy,
forging official documents, money laundering, and cyberterrorism. We also add a fifth—widestroke attacks.
•• Digital piracy—Digital piracy, as discussed in a previous chapter, is commonplace in
society. Most computer users who illegally download or share material do not consider
their activities criminal. Indeed, there is little incentive for content creators, content
distributors, or law enforcement to pursue digital piracy cases because an individual
person’s copyright infringement has little impact on the industry. However, Organized
Crime groups pirate content on a large scale and cost industries millions of dollars.
They have the financial resources to purchase the hardware to copy digitized content on
compact discs. They also have the connections and infrastructure to deliver the pirated
materials to marketplaces.
•• Forging Official Documents—Organized Crime groups participate in the digital reproduction of official documents, especially passports. The forging of official documents
is itself a crime. But as Grabosky argues, it is also a crime facilitator. Fraudsters use
driver’s licenses to open bank accounts for the depositing of stolen money. Criminals of
all stripes may wish to cross borders to evade law enforcement and can use false passports to do so.
•• Money Laundering—Governments monitor cash transactions, making it difficult for
criminals to conceal the origins of their cash. However, the infrastructure of Organized
Crime makes it possible for money to be “cleaned.” For example, the Organized Crime
group may have built a ledger of accounts in a number of countries and can route monies
across many jurisdictions making it difficult for funds to be traced. Another strategy is
to use people as mules to deposit cash below the threshold of surveillance. Yet another
strategy is to coordinate a phantom sale on an online auction website, where stolen cash
is deposited in an account disguised as monies from a sale. What is important here is
that these types of activities require a level of coordination and depth of infrastructure
most likely found in stable Organized Crime groups.
•• Cyberterrorism—Terrorist activities, primarily seen as ideologically or politically motivated, are not usually labeled as the work of Organized Crime groups. But as Grabosky
(2007) writes, “Most terrorist activity is certainly organized. And it is usually, if not
always, criminal. Moreover, one sees examples of terrorist organizations engaging in
more traditional criminal activity in order to raise revenue” (153). Cyberterrorists use
the digital environment for psychological warfare by making webcasts of executions
and bombings. They may also use the digital environment to disseminate instructional
materials on how to commit terrorist acts.
•• Wide-stroke attacks—In addition to the crimes already listed, Organized Crime Groups
supervise the mass deployment of malware, or what can be called wide-stroke attacks.
These attacks include the collection of personally identifiable information (PII) sometimes needed to deploy the malware, the extraction of money or information, and the
laundering of that money. Individual hackers or temporary groups can also perform
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7 Organized Cybercrime
these activities; however, Organized Crime groups can better organize the collection of
monetizable data and the laundering of money stolen. Moreover, because many examples of cybertrespass require social engineering, Organized Crime groups can better
deploy individuals over a variety of locations to steal PII to circumvent two-factor
authentication.
AN EXAMPLE OF ORGANIZED CRIME IN THE DIGITAL
ENVIRONMENT—THE CARBANAK/COBALT GROUP
One example is the Russian Organized Crime group called Carbanak/Cobalt. The group has been
in operation since 2013, and the name derives from the two pieces of malware—Carbanak and
Cobalt—used to steal over 1.3 billion dollars during that time frame (see Figure 7.1). Carbanak
was the name of the first penetration tool used, and Cobalt followed. The group has attacked over
Countries affected by Cobalt
Countries affected by Carbanak and Cobalt
Cobalt
starting
point
2014
Carbanak
2015
2016
2017
Cobalt
Figure 7.1 The countries affected by the Carbanak and Cobalt malware (Adapted from: www.europol.europa.eu/
newsroom/news/mastermind-behind-eur-1-billion-cyber-bank-robbery-arrested-in-spain).
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100 financial institutions across 14 European countries, including Britain, Russia, Spain, and the
Netherlands.
The attacks follow a general pattern. First, the group deploys the malware through a spear
phishing attack. Emails are sent to company employees, asking them to click on a link. Once one
computer is infected, the malware spreads throughout the financial institution’s network, eventually infecting the servers and ATMs. Next, criminals use money mules to extract cash. One way
this is done is by inflating the balance of bank accounts and then having a money mule withdraw
cash. Another is for the money mule to be at a specified ATM at a time when cash is automatically ejected. Next, the money is laundered by purchasing goods on black markets or converting
the cash into cryptocurrencies.
The Carbanak/Cobalt gang has many of the characteristics of an Organized Crime group.
The crimes are complex and sophisticated, with the production of specialized malware deployed
across a range of countries, and the need for a variety of coconspirators working together. The
organization exhibits a structure, with hackers and money mules being the two known roles.
There is also a recognized leader. In 2018, the leader of Carbanak/Cobalt, called “Denis K” was
arrested along with three other members of the group.1
The two other characteristics of Organized Crime we introduced—self-identification and
authority of reputation—are likely present. One indirect way of assessing reputation is to look at
how much resources are dedicated to investigating and stopping the crime. The arrest of “Denis
K” required the work of the Spanish National Police, Europol, the FBI, the Romanian, Moldovan,
Belarussian, and Taiwanese authorities, and private cyber-security companies.
Arresting the leaders of mafias and street gangs will slow down and destabilize an Organized
Crime group. However, these groups can often reorganize after a shuffle of roles and responsibilities within the group structure. After the arrest of “Denis K,” the Carbanak/Cobalt group is
still active.
Organized Cybercrime Myths
Many scholars are critical of the public’s understanding of Organized Crime. They believe
that the media sometimes over-hypes an instance of crime by describing it as organized,
and therefore more dangerous. Lavorgna (2018) argues that explaining instances of activities that are organized as organized crime is a rhetorical tool to attract more resources to law
enforcement agencies. In a study of UK news reports from 2010 to 2016, Lavorgna found consistent evidence that reports linking cybercrime with organized crime were “moral panics.”
Stories painted hyperbolic and exaggerated pictures of the prevalence and threat of organized
cybercrime. Similarly, Leukfeldt and colleagues (2017) argue that many countries, such as
the United Kingdom, link the seriousness of a crime to organized crime. A hacking activity
that creates a large data breach, like the ones discussed in Chapter 2, may be considered an
instance of Organized Crime simply because of the amount of money stolen. These crimes
may indeed be sophisticated. But their lack of structure, lack of self-identification amongst
those who participated in the crime, and the lack of reputation suggests that these crimes were
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7 Organized Cybercrime
committed by a collection of temporary co-conspirators, and not a stable group of organized
criminals.
Caution is required because the digital environment makes it easy for collections of individuals to come together and commit crime. However, the labeling of these networks as Organized
Crime may be premature. Because organized crime investigations are challenging and timeconsuming, much-needed resources in time, money, and intellectual energy may be wasted on
the wrong criminal activities.
The Unique Form of
Organized Crime Online:
Networks
The unique qualities of the digital environment have changed the way individuals work together
to commit crimes. One change is that crimes can be coordinated over greater distances and
greater time spans. For example, communication between leaders and subordinates can occur
via emails and instant messages, with one party being in North America sending an email or
text message, to be read by a subordinate in Estonia. Another change is that this coordination
can occur amongst a greater number of people. In the research for his famous ethnography Gang
Leader for a Day (2008), Dr. Sudhir Venkatesh comments on how the gang leader J.T. had to find
places for his gang to meet. As the leader, he had to identify and secure places large enough and
secret enough for upwards of 100 gang members to meet. This is no small task when law enforcement is attempting to monitor the movements of most of those individuals. The digital environment greatly reduces this difficulty as one need not meet physically to communicate in real time.
Thus, Organized Crime in the digital environment is characterized by networks—the ties
between individuals via their computer technology. And so, while sophistication, structure, selfidentification, and reputation are still important characteristics of Organized Crime, scholars
have worked to describe the new forms Organized Crime has taken in the digital environment.
We discuss two scholars’ attempts to categorize these new forms next.
MCGUIRE’S ORGANIZED CRIME TYPOLOGY
One typology, developed by McGuire (2012) posits three major types of organized cybercrime
networks (see Table 7.1). These major types are first organized by the amount of criminal activity
in the digital environment, and then divided into sub-types according to their level of cohesion.
Type I groups operate solely in the digital environment, meaning that the crimes they commit are committed online and their interactions with each other are online. These groups can be
either loosely organized swarms or more organized hubs. Swarms are quite common when committing acts that are considered as deviant but not necessarily criminal. For example, groups of
people may decide to harass someone on social media that they do not like because of a comment
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Table 7.1 McGuire’s Organized Crime Typology
Major Type
Weaker Associations
Stronger Associations
Hubs
Type 1
Swarms
Networks characterized by a smaller,
Operate solely in the digitalCollections of individuals who are
environment
minimally organized (e.g. hate speech stable leadership “core,” and many
peripheral and transient associates
groups, Anonymous)
(e.g. various “markets,” including
carding markets and the distribution
of child pornography)
Extended Hybrid
Clustered Hybrid
Type 2
More complex than clustered hybrids,
A small group of individuals with
Hybrids that operate in
with numerous associates and
numerous peripheral associates—
both the physical and
groups that carry out a wider range
similar in composition to hubs (e.g.
digital environments
of criminal activities (e.g. a group
hackers working with individuals
may skim and sell credit card data,
who place credit card skimmers in
and operate an online site soliciting
stores)
prostitution)
Aggregate Groups
Hierarchies
Type 3
Less organized collections of people who
Traditional organized crime groups
Operate in the physical
may only temporarily work together
such as the mafia that use online
environment, but use
and use technology to commit crimes
technologies to aid in their activities
Internet technologies to
(e.g. flash robs)
(e.g. drug smuggling, gambling)
help perpetrate crimes
they have made or stance they have taken. This behavior in most contexts does not require any
true coordination. Individuals can see one person they follow or admire flame someone online,
and then emulate them. In this manner, a few people with a large following can create a swarming effect. This same dynamic may underlie political resistance efforts such as BlackLivesMatter
and MeToo, where influential users of Twitter rally their followers to speak out about a cause.
Hubs are like swarms in that the activity occurs entirely online. However, there is a more welldefined leadership core. It is possible that within this core one can see more clearly the elements
of an organized crime unit—sophistication, structure, self-identification, and reputation. Around
this core are people who may not maintain long connections with the core, but temporarily work
with the core to commit crimes.
Types 2 and 3 are not exclusively digital in their interactions and orientation. Type 2 organized crime networks commit crimes both online and off. An example of this would be a group
that installs credit card skimmers in the physical environment, and then attempts to sell the card
data or make purchases in the digital environment. Type 2 networks are also divided by their
sophistication, clustered hybrids being less sophisticated than extended hybrids. Type 3 networks are primarily traditional offline organized crime groups that are now conducting activities online. For example, mafia groups have traditionally operated illegal gambling spaces in
the physical environment. They have now migrated online and have organized illegal gambling
operations in the digital environment.
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7 Organized Cybercrime
LEUKFELD’S TYPOLOGY
Leukfeldt and colleagues (2017) have provided a second typology, derived from a study of 18
phishing criminal investigations in Denmark. According to these scholars, organized cybercrime networks can be divided into three types based upon the sophistication of technology used
and the degree of victim–attacker interaction:
•• Type 1: Low-tech attacks with a high degree of victim–attacker interaction—The
attacker sends a phishing email to a victim stating that their account is not secure. The
victim supplies banking information when clicking on the link. An attacker then contacts the victim by phone and gains more information that can be used to steal monies
from the victim’s account.
•• Type 2: Low-tech attacks with a low degree of victim–attacker interaction—These
attacks are more sophisticated and find ways of extracting necessary information without the use of a phone call. A phishing email may be designed such that a victim inputs
all the necessary information via the email.
•• Type 3: High-tech attacks with a low degree of victim–attacker interaction—These
attacks are the most sophisticated and rely on various types of malware to infect and
control a computer. Once this occurs, the criminal network can manipulate the bank
transfers of the victim.
THE IMPORTANCE OF TYPOLOGIES
A typology can aid one in understanding how to investigate a criminal network. For example, using McGuire’s typology, a hierarchical group will require a different approach than a
swarm. The former is likely to be more serious in the types of criminal activities it can undertake and will require more long-term investigation techniques. Meanwhile, swarms may not
require as much long-term investment, however law enforcement may need to develop online
strategies that can be deployed quickly to deal with the types of offenses associated with
this type.
For the social scientist, questions can be asked as to what kind of offenders are more likely
to associate with a given organized network. For example, using Leukfeldt’s typology, it is likely
that the low-tech, high-interaction network is populated with offenders of different profiles than
those in the high-tech, low-interaction network. Those offenders who migrate to low-tech, highinteraction crime networks are comfortable with human interaction in the physical environment
and may branch off to other traditional types of con-artistry. Meanwhile, offenders operating in
high-tech, low-interaction networks may be classic “black hat hackers” who write malware for
crimes solely in the digital environment.
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Division of Labor in
Organized Cybercrime
Networks
Broadhurst et al. (2014) summarizes the ten roles in organized cybercrime networks, as outlined
in a speech given by Steven R. Chabinsky, Deputy Assistant Director, Cyber Division, Federal
Bureau of Investigation:2
1. Coders or programmers—They create the malware and exploits. The creation of malware and exploits is not in itself criminal.
2. Technicians—They maintain the supporting technologies, such as servers, ISPs, and
encryption.
3. Distributors or vendors—They trade and sell stolen data in carding markets.
4. Hackers—They search for vulnerabilities in applications, systems, and networks.
5. Fraud specialists—They develop and employ non-technical social engineering schemes.
6. Hosts—They provide facilities—servers and sites—for the storing and sharing of illicit
content.
7. Cashers—They control drop accounts and provide those names and accounts to other
criminals for a fee; they also manage individual cash couriers, or “money mules.”
8. Money mules—They transfer the proceeds of frauds to a third party for further transfer.
9. Tellers—They assist in transferring and laundering illicit proceeds through digital currencies and national currencies.
10. Executives—They select the targets, and recruit and assign members to the above tasks.
They also manage the distribution of criminal proceeds.
These roles speak to the complexity of organized cybercrime networks. They can grow quite
large and sophisticated. Not all networks will have a person or persons that fulfill each of these
roles. However, as an organized cybercrime network grows larger and undertakes a wider range
of activities it will need individuals to take on these roles. It is also the case that one person can
fulfill several of these roles. For example, one person may perform the roles of coder, technician,
and hacker as they require a similar skill set. Meanwhile, another person may handle the “human
contact” skills such as being a distributor or fraud specialist.
Prosecuting Organized Crime
in the Digital Environment
United States law enforcement agencies can use at least two statutes to prosecute organized
crimes. One is the Racketeer Influenced and Corrupt Organizations (RICO) Act. Individuals
who are members of a criminal enterprise and who have committed two acts of racketeering
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7 Organized Cybercrime
activity within the previous 10 years can be sentenced to up to 20 years in prison per racketeering
account. There are several forms of racketeering, including:
••
••
••
••
••
••
••
••
••
••
••
••
••
••
Bribery
Counterfeiting
Money Laundering
Murder for Hire
Drug Trafficking
Prostitution
Sexual Exploitation of Children
Alien Smuggling
Murder
Kidnapping
Gambling
Arson
Robbery
Extortion
The second is the Continuing Criminal Enterprise (CCE) Statute. This statute is narrower in
its scope and is used to prosecute leaders of criminal enterprises associated with drug trafficking. CCE is often referred to as the “Kingpin” statute for this reason. A conviction under CCE
results in a minimum 20 years in prison and a maximum fine of $2 million.
The term “enterprise” is important for both of these laws, as Organized Crime is equated
to a type of criminal enterprise. An enterprise, according to the RICO act, is defined as “any
individual, partnership, corporation, association, or other legal entity, and any union or group
of individuals associated in fact although not a legal entity.” A criminal enterprise according to
RICO, then, is:
any group of six or more people, where one of the six occupies a position of organizer, a
supervisory position, or any other position of management with respect to the other five,
and which generates substantial income or resources, and is engaged in a continuing series
of violations.3
DAVID RAY CAMEZ
In 2013, David Ray Camez became the first person convicted of a cybercrime under the
Racketeer Influenced and Corrupt Organizations (RICO) Act. Camez, operating out of Phoenix,
Arizona, participated in criminal activities on Carder.su. Carder.su was a website on which
fraudsters bought and sold a variety of goods and services including stolen credit card data and
malware. The website cost, according to prosecutors, about $51 million in losses for individuals
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and businesses. Camez was caught during an undercover online sting operation. Camez paid an
undercover agent money for a fake Arizona driver’s license under an alias. At a press conference,
Assistant Attorney General for Arizona David O’Neill said of the case:
Camez was a member of a vast criminal organization that facilitated rampant cyber
fraud throughout the world … This organization is the new face of organized crime—a
highly structured cyber network operated like a business to commit fraud on a global
scale. Members, like Camez, paid to tap into the network and gain control of highly sensitive information, like compromised credit card numbers and stolen identities. Thanks to
sophisticated law enforcement efforts, Camez will now pay for his crimes with decades in
prison.4
Camez was convicted of one count of participating in a racketeer-influenced corrupt organization
and one count of conspiracy to participate in a racketeer-influenced corrupt organization. His penalty is 20 years in prison, three years supervised release, and he must pay $20 million in restitution.
The prosecutors in the case were able to convince the jury that Camez was a “member of
a vast criminal organization,” and therefore could be prosecuted under RICO. However, social
scientists may question if a person who buys and sells illegal goods and services from a website is being prosecuted under the spirit of the law, in which the aim is to address members of
criminal organizations. By way of contrast, Roman Olegovich Zolotarev was an administrator of
Carder.su. He was a more permanent and instrumental node in the criminal network. However,
Zolotarev, a Russian citizen, is as of this writing at-large.
The conviction has wide-ranging implications. This suggests to future prosecutors that other
individuals who partici
