Lessons From A Young Cyberthief; Ethan Allen Tells How He Stole Nearly $120,000 Online

By the time he was caught, Ethan Allen was almost grateful the hiding was over.

He had been on the run from four felony counts in Michigan relating to Internet fraud. Worse, he knew the investigation had broadened, and that the feds were on to him for swindling scores of online buyers out of thousands of dollars.

The arrest came on a federal warrant in April in a dingy motel along Pacific Highway South where Allen was staying. As luck would have it, he was booked on his 20th birthday.

Allen has been in custody ever since. He will be spending Christmas behind bars at the federal detention center in SeaTac, where he is serving a one-year sentence.

Ethan Allen is the first person - but likely not the last - to be charged and convicted by the U.S. Attorney's Office in Seattle of scamming people over the Internet.

It's a new flavor of wire fraud that sometimes leaves law-enforcement authorities befuddled over how it should be handled. It's also a class of crime that police and prosecutors acknowledge is only now getting the attention it deserves.

Allen looks barely old enough to shave. Born in Tacoma and raised in Federal Way, he comes from an upper middle-income family.

His father is president of United Way of Pierce County; his mother is an executive at Harborstone Credit Union. It is painful for them to talk about what has happened to their eldest son.

A month after his arrest, Allen pleaded guilty to wire fraud, a felony. He admitted to tricking more than 50 victims across the United States and overseas by falsely advertising computers for sale on the World Wide Web.

He would collect payment in advance, then ship the victims empty boxes or nothing at all. All told, over an 18-month period, he netted nearly $120,000 - money he is supposed to repay his victims.

In an interview, Allen said he has nothing to show for his gains. "I blew it like free money, coming out of nowhere," he said.

But it did help finance an unusual lifestyle. As a teenager, he maintained a $600-a-month apartment in Federal Way. Later, when he met a girl he liked via the Internet, he paid a similar monthly rent to set up a second household in Michigan, where she lived.

Otherwise, he spent the money to get a $400 paint job for his '76 Chevy Nova and for whatever computer games caught his fancy.

The interview with Allen occurred after he wrote to The Seattle Times from prison. He had read an article that made passing reference to his conviction but focused on a new investigation by the U.S. attorney into a similar case.

"I have, of course, first-hand experience with Internet fraud, and I know the things to look for in a scammer," Allen said in his handwritten letter.

"Being only 20 years old, with a long life ahead of me, I feel like I need to give back to society and head towards a normal, law-abiding life."

Few of Allen's victims responded to requests for comment, and those willing to talk reserved judgment.

"It sounds like there's some sincerity, but it's hard to know for sure," said Donald Wenzel of Ypsilanti, Mich., who doubts he'll ever see the $1,135 he lost to Allen.

Reflecting on his days as a cyberthief, Allen said in an interview: "I was kind of addicted to it. It wasn't something I was doing to get money anymore or just because I was greedy. I feel it was just something that I was addicted to."

Allen's interest in computers started early in life. At age 5, he played with his first machine, an Apple IIe his parents purchased. "Ever since they bought that computer, I always played little kids' games on the computer . . . and I just started getting big into the computers," he said.

In sixth grade, his teacher invited him and a few of his classmates to enter a nationwide contest sponsored by Boeing on what computers would be like in the year 2000. His team won, scoring a new Macintosh for the class.

He had his first online experience at age 13 or 14, tapping into America Online using a Mac. "I'd be in the chat rooms a lot, just experimenting," he said.

A teenage buddy introduced him to the Internet "underground" - restricted chat rooms where users swap credit-card information and traffic in pirated software.

It was so simple and anonymous: All he had to do was type in a stolen credit-card number, and the next day a package containing a piece of software or a computer game would magically appear at his door.

"I would never go into a house and go rob somebody with a gun to their head," Allen said. "It's just not me. There wasn't anybody I could see who was getting victimized. It just made it easier for me to do it."

On top of that, the criminal-justice system wasn't a major obstacle. In January 1997, he was charged as a juvenile with two counts of second-degree theft. The charges related to online escapades in which he was accused of trafficking in stolen credit cards and using his computer to generate checks he cashed. He received a one-year deferred sentence.

It didn't stop him. Eighteen months later, Federal Way authorities arrested him on suspicion of ripping people off online. He did a day in jail, but no charges were filed.

Meantime, he was cutting classes and was kicked out of Federal Way's Decatur High School with less than two credits short of graduating.

He was a much better student of developments in the computer world. In some of his online ads, for example, Allen offered Dell computers with components so new they were yet to be available publicly. Investigators would later hint that he had improper access to proprietary information. In fact, Allen said, he listed components based on his guesses as to what improved systems would include.

To lull victims into a false sense of security, he sometimes would send packages and provide buyers with a shipper's tracking number so they would think the product was coming. But when the package arrived, there was nothing inside.

In 1998, while spending time with his girlfriend in Michigan, he scammed new victims by logging onto the Internet from computers in public libraries.

Late that year, the prosecutor in Livingston County, Mich., charged him with four felonies, this time as an adult. From his attorney, Allen learned the FBI also was sniffing around. While the state charges were pending, Allen skipped town.

When he finally was arrested on a federal complaint last April, it actually was a relief, he said. "I am glad I got caught," Allen said. Later, Michigan authorities decided to drop their charges in lieu of the federal case.

Since his capture, Allen said he has volunteered to help the FBI in investigations of other crimes. So far, the FBI has declined his offer.

While in federal custody, Allen received his high-school equivalency degree. He hopes to attend college to study computer science and business administration.

Next month, he is slated to move to a halfway house. With time off for good behavior, Allen's Bureau of Prisons release date is Feb. 23. After that, he faces three years of court-ordered supervision and must make restitution to his victims.

He also must keep his probation officer informed of every piece of hardware and software he acquires, and of what he does when he goes online. Any computer he gets is subject to inspection by federal authorities.

A federal-court official familiar with Allen's case who didn't want to be identified was noncommittal about the young man's future:

"He's got the skills that, if he does something legitimate, he'll make a good living. He's also got the skills that, if he goes to the other side of the law, he can do that, too."

His parents say their son seems to have matured since his incarceration.

"At this point, we're feeling like it (prison) has been the right thing for him at the right time, which is a tough thing for a parent to say," said his father, Rick Allen.

"We hope he'll be able to use his talents in a positive way," said his mother, Alvarita Allen. "He's very bright. . . . We've got a lot of faith in him."

Peter Lewis' phone message number is 206-464-2217. His e-mail address is plewis@seattletimes.com

---------------------------------------------------------------.

Tips for buyers

Here are some of Ethan Allen's tips for buyers on how to avoid getting taken on the Internet. As a convicted felon, Allen should know - he conned more than 50 victims:

Double-check with directory assistance to make sure the seller's phone number and address match. If they don't, it's possible the seller is using voice messaging or pager numbers - tools Allen used to defraud buyers.

Check to see if the seller's address is a residence or a business. If it's a business, that's a possible warning flag. Allen used Mailboxes, Etc., as a mail drop. He would add an apartment number to his mail-drop address to give buyers a sense of security.

Understand that credit cards don't afford complete protection under all circumstances. When buyers wanted to use credit cards, Allen obliged, as long as the buyers consented to use them to secure Western Union wire transfers. Once the money was wired, Allen would walk to the local Western Union office and collect the payment. When customers tried to stop payment on their cards after not receiving merchandise, they usually were stuck with the loss because banks considered such credit-card use a cash advance.

Don't assume a seller is safe to do business with merely because others have registered positive online comments about their dealings with him. On eBay, the Internet's premier auction site, Allen masqueraded as a variety of satisfied buyers to give himself high marks.

As with everything, if the price is too good to be true, be suspicious.