E-Trade Salami-Slice Fraudster Sentenced to Jail

A Californian man who defrauded several companies, including Google, through a salami-slice scheme during 2007 and 2008, was sentenced to 15 months in prison on Thursday. Additionally, the judge ordered him to pay over $200,000 as restitution.

Michael Largent, 22, of Plumas Lake, California, was arrested back in 2008 following a United States Secret Service and FBI joint investigation into what is known as a salami-slicing attack. The scam targeted companies such as E-Trade and Charles Schwab & Co. and involved setting up thousands of fraudulent brokerage accounts in order to steal micro-deposits.

Largent opened over 58,000 fake accounts by using an automated script that he developed himself. According to normal verification procedures, the companies proceeded to depositing small sums of money that ranged between $0.01 and $2.00 into the bogus accounts, which the fraudster then transferred to prepaid debit cards. According to the investigators, this scheme earned him around $50,000.

In order to carry out this attack, Largent basically exploited a business-logic flaw, which in theory is not illegal, as there was no limitation specified for the allowed number of accounts or verification micro-deposits. Largent's prosecution focused on the fact that he set up accounts using fake identities and information. "LARGENT used false names, addresses, driver’s license numbers, and social security numbers, including the names of known cartoon and comic book characters to open the accounts," a Department of Justice press release specifies.

The scam ran from November 2007 through May 2008, when the companies targeted independently discovered it and contacted the authorities. The case was prosecuted by Assistant United States Attorney Matthew D. Segal, a prosecutor in the office’s Computer Hacking and Intellectual Property (CHIP) unit. According to the DOJ, during the sentencing, United States District Judge Morrison C. England Jr. mentioned that the scheme took some sophistication, and wondered why Largent didn't consider using his skills and talents in a lawful way.