E-Trade 'salami slicer' pleads guilty to fraud
Tuesday, May 26, 2009
A California man has pleaded guilty to charges that he used fraudulent online brokerage accounts to collect thousands of tiny test deposits in a so-called salami slicing scam.
Michael Largent allegedly opened more than 58,000 accounts with online traders such as E-Trade and Charles Schwab under fake names to collect small deposits - usually only a few cents - the companies send out to verify that the user has access to the bank account listed.
Other companies, including Paypal, use the system of micro-deposits to verify bank accounts and credit and debit cards linked to accounts.
Largent, 23, of Plumas Lake, California, pleaded guilty last Thursday to computer fraud charges in connection with the scam, which he allegedly ran between November 2007 and May 2008, according to IDG News Service.
Largent's arrest last May received broad attention for the similarity of the scam to similar schemes popularized in films like Superman III and Office Space.
Largent allegedly wrote a script that set up thousands of online accounts under fake names that included cartoon characters. He is alleged to have taken in more than $50,000 in this way.
The U.S. Justice Department said Largent will be sentenced on August 13 and will face up to five years in federal prison on two computer fraud charges, according to IDG News Service.
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