Vadim Vassilenko, president of Western Express International, along with four defendants, allegedly formed and participated in a criminal enterprise. They were charged with crimes such as scheming to defraud, money laundering, grand larceny, and enterprise corruption. Western Express International operated legitimate services, such as cash checking and translation services; it also allegedly operated illegal activities such as acting as an intermediary for buying and selling stolen credit card data for a commission. Stolen credit card data was alledegly sold through Western Express International to people such as Latta, Perez, Roach, and Washington. The purpose of this sale was to use stolen credit card data to make fraudulent purchases on the internet. Additionally, Western Express provided vendors with credit by using digital currencies like Egold and Webmoney, which were unregulated. This allowed vendors to engage in transactions without disclosing their identities.
The appellants were charged with cybercrimes, such as scheming to defraud, money laundering, grand larceny, and enterprise corruption, although the present appeal dealt with the charge of enterprise corruption. They allegedly used the business entity Western Express International to avoid detection and to systematically traffic stolen credit card data and to engage in money laundering. Computers at Western Express International and Vassilenko’s residences included evidence of money orders, forged credit cards, and defendants’ email, which contained information such as illegally obtained credit card numbers. The prosecution sought to establish that a criminal enterprise existed in order to carry out these activities, which occurred alongside Western Express International’s legitimate business activities. Hackers obtained credit card information that was then used to make counterfeit credit cards or to purchase things online fraudulently.
Vassilenko, president of Western Express International, allegedly sought to use the business as a business with legitimate activities in order to allow people to carry out their illegal activities without detection.
United States of America
European UnionForged credit cards as well as computers were confiscated.
Information retrieved from seized computers, such as money orders, forged credit cards, and defendants’ emails including stolen credit card account numbers, which was obtained by hackers, among other methods, were also used as electronic evidence. There was also evidence that Vassilenko created websites and internet forums that had posts about stolen account information, and Western Express International employees assisted customers that were engaged in buying and selling stolen credit card data. One way they allegedly did so was by giving them credit in e-currencies such as Egold and Webmoney, which were not regulated, in order to avoid identity detection.
Supreme Court of the State of New York (Appellate Division, First Department)
The trial court had dismissed the enterprise corruption count of the indictement. The prosecution appealed this dismissal. The question for the Appellate Division of the Supreme Court of New York concerned the intended scope of the enterprise corruption provision of N.Y.’s Organized Crime Control Act (OCCA) 1986. The court had to decide whether the proof presented to the grand jury was sufficient to show that the defendants’ combined activities constituted the type of “ascertainable structure” necessary to satisfy the definition of criminal enterprise.
The Penal Law § 460.10 (3) defines criminal enterprise as “a group of persons sharing a common purpose of engaging in criminal conduct, associated in an ascertainable structure distinct from a pattern of criminal activity, and with a continuity of existence, structure and criminal purpose beyond the scope of individual criminal incidents.” The Court concluded that the criminal operation created by Western Express International had the requisite ascertainable structure to qualify as a criminal enterprise and the evidence was sufficient to cover the type of criminal enterprise covered by the statute. The Court concluded by reversing and reinstating this count of the indictment.
This represented a potential advancement in the development of the case law on this issue, because of the cyber nature of the crime. The Court made a point of noting that before the internet became widespread, “organized criminal organizations were always tangible entities whose location could be pinpointed and whose members could generally be found in relatively close proximity to each other and their victims. The internet has provided an extraordinarily useful new tool for criminals to perpetrate crimes in entirely new ways. Not only does the Internet permit individuals to commit traditional criminal offenses in cyberspace through the use of computers […], but it created the opportunity for loosely organized networks to coordinate large-scale criminal operations such as thefts of millions of dollars in funds from banks worldwide, or the penetration of telephone network computer systems and theft of phone card information […].”
Judge Andrias dissented, arguing that the defendants’ activities were insufficient to show a criminal enterprise under OCCA. He argued that the activities were for their own individual benefit and were undertaken without a chain of command, profit sharing, or continuity of criminal purpose that was distinct from the scope of the activities in the indictment. He considered that the Legislature would have to determine the unique issues posed by the internet, not the courts.
The defendants appealed the decision of the Appellate Division of the Supreme Court of New York.
Court of Appeals of New York
The Court of Appeals reversed the Appellate Division’s decision and reinstated the orders of the Supreme Court dismissing the count of enterprise corruption.
The Court of Appeals noted that the Supreme Court had granted the appellants’ motions to dismiss the enterprise corruption count from the indictment, as the proof presented to the grand jury “did not make out the existence of a ‘criminal enterprise.’” To be found guilty under enterprise corruption under the legislation, proof must raise to the standard of showing that the accused:
“‘when, having knowledge of the existence of a criminal enterprise and the nature of its activities, and being employed by or associated with such enterprise … intentionally conducts or participates in the affairs of [the] enterprise by participating in a pattern of criminal activity’”.
The Court of Appeals argued that the Appellate Division acknowledged that there was no evidence of a traditionally structured, hierarchical entity.
In this case, the Court of Appeals considered that the prosecution had presented a pattern of illegal behavior. The pattern of activity around Western Express International’s “hub-like websites” did not amount to more than a description of the pattern in the carding market. The Court considered that this pattern did not lead to the conclusion that a structured criminal organization existed. The Court of Appeals also observed that the individuals acted in their own interests. While the prosecution argued that a criminal organization need not be hierarchical in structure and that patterns of conduct could allow structure to be inferred, the Court of Appeals stated that under OCCA, a criminal purpose is necessary, and that structure must be ascertainable. It did not consider the conditions fulfilled.
However, Judge Pigott dissented, arguing that New York courts had allowed OCCA to be applied to cybercrime as a matter of discretion. He argued that as organized crime evolves, the internet has changed criminal operation in terms of hierarchy and formalized decision making. He disagreed with the argument that within the prevalent black market, there was not a criminal enterprise connected to appellants and did not find this requirement in the statute. He considered the group to have acted with a common criminal purpose and an ascertainable criminal structure.
The defendant hold the position of president of Western Express International, Inc. He tried to position Western Express International as the preferred carder agency, or the preferred agency for those who purchase and sell stolen credit card data.
The defendant bought stolen information through Western Express International and committed credit card fraud.
The defendant bought stolen information through Western Express International and committed credit card fraud.
The defendant, also known as Angela Cianno, bought stolen information through Western Express International and committed credit card fraud.
New York Penal Law, § 460.20 [1] [a]
Enterprise corruption
New York Penal Law, § 460.20 [1] [a]
Enterprise corruption
New York Penal Law, § 460.20 [1] [a]
Enterprise corruption
New York Penal Law, § 460.20 [1] [a]
Enterprise corruption
New York Penal Law, § 460.20 [1] [a]
Enterprise corruption
Court of Appeals of New York
The People of the State of New York, Appellant, v. Western Express International, Inc., 85 A.D.3d 1 (2011)
The People of the State of New York, Respondent, v. Western Express International, Inc., et al., 19 NY.3d 652 (2012).
This case provides an example of how courts apply the requirement of a structured criminal organization to cyber cases.
In this case, the Court of Appeals considered that while the internet may facilitate the commission of crime, and a website may screen clients' illegal transactions, it does not mean that a website is elemental to and reflective of a criminal enterprise. The Court noted that the individuals acted in their own interests and not in the interest of a separate criminal organization. Thus, cybercrimes are not always part of criminal enterprises.