Cyber Crime Conspiracy

Four Fugitives Taken Into Custody in Mexico; Wanted in Connection with Massive Cyber Crime Conspiracy Defendants Allegedly Defrauded Telecommunication Companies and Others of More Than $15 Million Robert E. Casey Jr., Special Agent In Charge, Dallas, FBI, announced that four fugitives wanted in connection with the Core IP cyber crime investigation were taken into custody earlier this morning.

Early this morning, January 15, 2010, Mexican Police authorities, in cooperation with the FBI, took into custody MICHAEL BLAINE FAULKNER, age 36; CHASTITY FAULKNER, age 34; JASON WATTS, age 32; and WILLIAM WATTS, age 38, in Cancun, Mexico.

As reported in a press release issued January 8, 2010, by the U.S Attorney’s Office, Northern District of Texas, a federal grand jury in Dallas returned a superseding indictment charging 19 defendants in a massive cyber crime conspiracy. This indictment superseded a September 2, 2009, indictment that charged nine of the defendants in the conspiracy.

At the time of the superseding indictment, Internet reports suggested that MICHAEL FAULKNER was killed attempting to reenter the U.S. from Mexico. This report was not accurate. It is believed shortly after the FBI executed search warrants at FAULKNER’S home in Southlake, Texas and at a business run by the FAULKNERs known as Crydon Industries in Dallas, Texas on March 12, 2009, MICHAEL FAULKNER, CHASTITY FAULKNER, JASON WATTS, and WILLIAM WATTS fled the United States, going to the Monterrey, Mexico area before moving on to Cancun, Mexico.

Nineteen defendants have been charged with one count of conspiracy to commit wire and mail fraud. Defendants (3) through (7), who were charged in the original indictment, have made their initial appearances in federal court and, with the exception of defendant (6), are on pretrial release. Defendant (6) remains in custody. Defendants (10) through (15) and (18) and (19) were either arrested or have surrendered to federal authorities the first week of January. Defendants (16) and (17) are outside of the United States.

*Chastity Lynn Faulkner, 34, of Southlake, Texas (Captured)

*Michael Blaine Faulkner, 36, of Southlake, Texas (Captured)

*Brian Patrick Haney, 36 of Plano, Texas

Eric Byron Littlejohn, II, 19, of Desoto, Texas

Nathan Todd Shafer, 31 of Irving, Texas

*Matthew Norman Simpson, 25, of Red Oak, Texas

*Alicia Nicole Cargill Smallwood, 28, of Midlothian, Texas

*Jason Carter Watts, 32, of Plano, Texas (Captured)

*William Michael Watts, 38, of Plano, Texas (Captured)

*Logan L. Vig, 22, of Dallas, Texas

*Arya Neal Behgooy, 33, of Plano, Texas

*Christopher Wayne Sigler, 27, of Roanoke, Texas

*Marcus William Wentrcek, 29, of Frisco, Texas

*Valerian James Stock, 42, of New Orleans, Louisiana

*Ricky J. Keele, 55, of Coppell, Texas

*Dmitri Siiatski, 22, of Canada

*Milos Vujanic, 29, of Eastern Europe

Jennifer Jo Gilliland, 29, of Phoenix, Arizona

Casimir A. Wojciechowski, a/k/a Casey, 56, of Illinois

The eight-count indictment also charges 15 of the defendants (*) with fraud and related activity in connection with electronic mail and aiding and abetting. Michael Blaine Faulkner is also charged with one count of obstruction - threatening a witness or informant; one count of obstruction - hiding assets; one count of obstruction - destruction of evidence; and one count of false registration of a domain name. Matthew Norman Simpson is also charged with one count of obstruction - destruction of evidence and one count of false registration of a domain name. Logan L. Vig and Milos Vujanic area also each charged with one count of obstruction - destruction of evidence. The indictment also includes a forfeiture allegation which would require that the defendants, upon conviction, forfeit any proceeds obtained, directly or indirectly, as a result of the offense.

The indictment alleges that from March 2003 through July 2009, the defendants conspired to defraud various telecommunications companies, including AT&T; Verizon; XO Communications; SMARTnet VOIP; Waymark Communications; the lessors of properties at 2020 Live Oak, 2323 Bryan Street, and 1950 Stemmons Freeway, in Dallas; various financial institutions; leasing companies and creditors, including Wells Fargo, AT&T Capital Services, and the credit reporting agencies; and various other service providers, such as power companies, insurance companies, air-conditioning companies, website developers, and others for goods and services amounting to more than $15 million.

The indictment further alleges, that as part of the conspiracy, the conspirators made false representations to obtain goods, such as computer and telecommunications equipment and infrastructure, to include racks to hold computer equipment, generators to provide power for the equipment, and office space to install the equipment, as well as services related to the operation and use of computers and telecommunications. The conspirators created, purchased and used shell companies to hide the true identity of the owners or operators of the companies, or the relationships between the companies. They also established P.O. boxes, commercial remailer services, shell offices, apartments, or other physical locations to hide owners’ or operators’ identity or the relationships between the companies. They assumed multiple fake identities to hide true ownership of the shell companies and made materially false representations to their victims, by mail, fax, telephone, e-mail, or other communications, to obtain goods and services from them.

A series of search warrants were conducted by FBI agents in March and April 2009 at Chastity and Michael Faulkner’s residence in Southlake, and at a Faulkner business, Crydon, located at 1950 Stemmons Freeway in Dallas. Searches were also conducted at Core IP, located at 2323 Bryant Street in Dallas, and at other related businesses.

An indictment is an accusation by a federal grand jury and a defendant is entitled to the presumption of innocence unless proven guilty. However, if convicted, the conspiracy charge carries a maximum statutory sentence of 30 years in prison and a $1 million fine. Each of the obstruction charges carries a maximum statutory sentence of 20 years in prison and a $250,00 fine. If a defendant is convicted on a felony and also on false registration of a domain name, the penalty for that felony conviction is doubled, or increased by seven years, whichever is less. Restitution could be ordered.

SAC Casey expressed his appreciation for the investigative efforts of the FBI - Mexico City and Mexican Police Authorities, as well as the assistance provided by the Texas Workforce Commission, the Texas Secretary of State, the Dallas Police Department, the Southlake Police Department, the Dallas Sheriff’s Office, the Ellis County Sheriff’s Office, the Duncanville Police Department, the Longview Police Department, the New Orleans Police Department, and the American Registry for Internet Numbers (ARIN).