The Department of Justice has filed an indictment against Joseph Willner, 42, of Ambler, Pennsylvania, accusing the day trader of hacking into brokerage accounts at various financial companies and placing unauthorized trades.
The alleged scheme revolved around Willner putting up "short sale" offers for stocks at publicly-traded companies at inflated prices.
According to the DOJ, Willner and a yet-to-be-named co-conspirator hacked into trading accounts at legitimate brokerage firms and bought the short sale offers at the inflated price.
Willner then "covered the short" by repurchasing the stocks at their real market value, at a much lower price.
The scheme supposedly netted Willner and his partner at least $700,000 while causing losses of over $2 million at the hacked companies.
All of this happened within minutes, and in pre-market and after-hours trading, which eventually led some companies to investigate the suspicious transactions.
According to court documents, Willner and his co-conspirator operated between September 2014 and May 2017.
In Twitter direct messages obtained by investigators, they discovered that Willner agreed to split revenue "half half" with his partner. Willner converted earnings into Bitcoin before transferring the funds to his partner.
In addition, conversations between the two show that some brokerage firms picked up on Willner's actions and banned his trading account. To avoid getting detected, Willner and his partner used IP addresses from the same cities and also agreed to rebuy stocks at smaller price differences.
"15% is legit.. nothing mor[e]," one of Willner's message read, while his partner replied in another message that "legal trading [is] too hard."
Currently, authorities have charged Willner on four counts — conspiracy to commit wire fraud, conspiracy to commit securities fraud and computer intrusions, securities fraud and conspiracy to commit money laundering.
A copy of the Willner DOJ indictment is available here.