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Trends offers a small selection of stories about what scammers are doing in the digital age and how they manage to go unnoticed for a long time.
In its new special issue, Bloomberg has collected the biggest scams of our time. Trends decided to share the most interesting stories from the chronicle of digital crimes. This is the first part of the compilation: about Italian Supreme, painted stones that were passed off as copper, bleach medicine and millions stolen from Microsoft.
The second part of the compilation is Chinese hackers against Canada, a virtual theft of a painting and a fraudulent influencer from Nigeria.
An employee stole $10,1 million from Microsoft
In November 2020, a US court sentenced a former Microsoft employee to nine years in prison. Ukrainian citizen Volodymyr Kvashuk stole a total of $10,1 million from the company.
In 2017, Kvashuk became a full-time Microsoft employee. His team was involved in modeling purchases in the company’s online store and looking for failures in the payment system when buying gift cards.
An XBox gift card contains 25 letters and numbers. Exactly the same numbers, known as the 5×5 code, are sent by email after the purchase – they are no different from the code on real gift cards in the basket in CVS or Target. The cards themselves are worth nothing, but the 5×5 code corresponds to the dollar amount. For example, “DD9J9-MXXXC-3Y6XD-3QH2 °C-PWDWZ” is equivalent to $15 worth of everything Microsoft has sold online, whether it’s video games, Office and Windows, Lenovo laptops, or Sonos speakers. That is, any such code of 25 characters is a digital currency that can be exchanged for bitcoins, and then turned into real money.
The Kvashuk team made test purchases of gift cards, without bringing the process to the stage of delivering the card to the client. They did all this with a fake Microsoft corporate credit card that was read by the system.
During one of the tests, Kvashuk discovered a bug that allowed him to earn millions of dollars in fraud. He noticed that every time he checks for a gift card purchase, the Microsoft Store emails real 5×5 codes that can be used to purchase items in the online store. The more fake purchases using a corporate card, the more real codes in email.
Kvashuk started small, generating gift cards ranging from $10 to $100. All this he sold on the black market. By the time federal agents caught the scammer, Kvashuk had stolen more than 152 cards worth $10,1 million and bought the house for $1,6 million.
Italian businessman made a fortune by counterfeiting Supreme clothes
Italian entrepreneur Michel di Piero has made a career out of manufacturing and internationally expanding fake clothing under the Supreme brand, almost legally.
In January 2016, at the Pitti Uomo menswear show, sweatshirts and caps with the famous “Supreme” slogan were introduced, very reminiscent of those that cost $150 and up. But on the podium was not a collection of a New York streetwear brand at all, but the works of an Italian company that stole the design and logo of Supreme.
The Italian Supreme was the first to apply for trademark registration in those countries (Italy, Spain and China were included in the list) where Chapter 4 Corp., the owner of the real brand, has not yet managed to do this. With these documents, the company began manufacturing counterfeit, but legally legal, Supreme-branded clothing in the small port of Bisceglie on the Adriatic Sea.
Initially, the Italian Supreme was sold only in small local stores and on the Internet, but within a few years the company’s income grew to €1 million, and the founder of the business, Michel di Piero, who was involved in money fraud back in 2007, began to publish photos on social networks and videos illustrating its success.
In 2017, di Piero opened outlets in Spain, one in the city center that was very similar to the original store in New York. Soon Chapter 4 found out about the Italian “branch” of Supreme, hired a private detective and recognized di Piero’s company as a “counterfeit organization”. However, the Italian businessman did not stop selling and continued to travel the world posting selfies on Facebook. In 2019, a fake clothing store called Supreme opened in Shanghai.
When the Italian court got to di Piero, he closed his businesses in Italy, but the stores remained in Spain and China. He even started selling Supreme T-shirts that depicted his conflict with Chapter 4, and did not close outlets outside of Italy until China and the EU recognized ownership of the trademark for the New York company.
In 2020, di Piero tried again to show clothes at Pitti Uomo, but under the Vision Street Wear brand, registering a trademark in San Marino. On June 25, 2021, a London court sentenced him to eight years in prison for copying the Supreme brand.
Tons of decorated paving stones instead of copper were delivered to China
In the spring of 2020, as China emerged from its lockdown after the first wave of the pandemic, manufacturers began placing orders for raw materials en masse, especially for copper, which is used in power plants, pipes for buildings, batteries and motors for electric vehicles. One of the Swiss traders tried to close China’s orders by making a deal with a Turkish firm for $40 million for 7 thousand tons of copper in the form of blocks.
Copper was loaded in the Turkish city of Takirgad. The inspector checked the entire batch for the purity of the metal, he also installed protective seals in the trucks. The truck drivers were asked to pick up the cargo only the next day. At night, thieves got into the warehouse of the supplier. They brought with them many pallets of paving stones, which were similar to copper in weight and shape. The entire stone was spray-painted in copper color. It was loaded into containers and covered with fake seals.
The next day, the shipment of paving stones went to the port, and the Turkish supplier received the first payment of $2,5 million. When the customer in China received tons of stones, the copper supplier had the full amount of the transaction.
The Chinese company contacted the supplier and demanded an explanation, but they assured that most likely the replacement of copper with paving stones took place after the cargo left the Turkish port. All the documents turned out to be fake, but the police were not long at an impasse: they were able to find the criminals through the payment account.
For the theft, 16 people were arrested, including two representatives of the management of the company that supplied copper. They deny their involvement in fraud. The metal itself was never found.
American archbishop sold bleach cure for all diseases
The family of the American Archbishop Grenon has been selling the Miracle Mineral Solution, or “sacred” drink, for more than a decade that can cure Alzheimer’s disease, cancer, and even the coronavirus that has been relevant in the last year. Thousands of people have bought MMS to inject, bathe and spray with the magic medicine.
Near the warehouse on the territory of the church in Bradenton (Florida), a team of specialists seized about 190 liters of hydrochloric acid and about 4 kg of sodium chloride. If you combine these chemicals, you can get chlorine dioxide, which is used as an industrial bleach – this is the main ingredient in the “sacred” Grenon drink. Researchers have labeled some bottles with “1494” labels, denoting that the substances inside are so poisonous that they can burn the throat, stomach walls, or cause blindness.
Cybercrime agent José Rivera managed to reach the creators of MMS. Under an assumed name, he ordered the G-2 Sacramental Kit from the Grenon website, and when it arrived, the medicine bottles had notes signed with the name of Archbishop Mark Grenon. Then Rivera found an email address on a pamphlet and wrote a letter to the archbishop, asking how often to take medicine to get rid of cancer. Rivera also checked the homeowners at the address listed for the return. So the organs came to the Grenon family.
Before the pandemic, the Grenons were making $30 a month selling Miracle Mineral Solution to customers confident that the drug could cure up to 95% of known diseases. Since the coronavirus outbreak, sales have tripled. According to bank records, in 2020, before the arrest, Grenon and his sons wanted to sell a “medicine” worth $1 million.
The Grenon family faces life imprisonment, however, as the archbishop himself said, MMS sales have not been stopped in another 145 countries around the world.
In 2019, the US Food and Drug Administration (FDA) was already warning Americans about the dangers of MMS, citing more than 16 reported cases of chlorine dioxide poisoning.