Man charged with selling fake discount coupons on Silk Road

The trade in counterfeit coupons still thrives on other underground marketplaces

Counterfeit coupons are sold across underground websites, offering vast discounts on household goods.

Counterfeit coupons are sold across underground websites, offering vast discounts on household goods.

A Louisiana man has been accused of creating counterfeit coupons and selling them on the Silk Road underground websites, potentially defrauding businesses of more than US$1 million, the Justice Department said Thursday.

Prosecutors said Beau Wattigney, 30, of New Orleans, created coupons that look like print-at-home coupons from manufacturers, including fake logos. The coupons offered vast discounts on the retail price of some items.

He offered one of the coupons, for a $50 Visa gift card, for 1 cent, prosecutors said.

Wattigney is alleged to have sold packages of the coupons between May 2012 and last November on the Silk Road 1.0 and 2.0 websites, the now closed underground marketplaces that traded mostly illegal goods.

The coupons were sold under nicknames such as GoldenLotus, PurpleLotus, MoxDiamond and NickMode.

Wattigney was charged with conspiracy to commit wire fraud and conspiracy to commit trademark counterfeiting, in the U.S. District Court for the Eastern District of Louisiana.

More than 50 businesses were targeted and could have sustained as much as $1 million in damages if the coupons were redeemed, according to the indictment. The coupons spoofed services that distribute coupons such as Hopster,, SmartSource and RedPlum.

He allegedly made more than 2,000 sales and advertised one of the products as "The Original S.R. Exclusive Coupon Collection." That package sold for $54.44 to someone in the District of Colombia on the Silk Road 1.0.

There's still a thriving trade in counterfeit coupons, and it's easy to find other groups engaged in the same activity that Wattigney is accused of. A group calling itself TeamLotus has a website that uses a ".onion" address, which uses the Tor network to make its true IP address harder to trace.

TeamLotus offers packs of counterfeit coupon loosely organized into product categories such as baby essentials, breakfast and cereal and cleaning supplies. The packs cost $35 but offer several times that value in savings if redeemed.

On an information page, TeamLotus refers to the person identified by prosecutors as Wattigney, writing that "Purple Lotus has long ago retired and passed the mantle of coupon anarchy to a dedicated, some would say fanatical, cadre of disciples.

"Purple Lotus was the first to admit, that the students had surpassed the master," it said. "That is why he could retire in peace, knowing that his baby would live on for years to come."

Send news tips and comments to Follow me on Twitter: @jeremy_kirk

Join the CSO newsletter!

Error: Please check your email address.

Tags Criminalno companysecuritylegalcybercrime

More about Visa

Show Comments

Featured Whitepapers

Editor's Recommendations

Solution Centres

Stories by Jeremy Kirk

Latest Videos

  • 150x50

    CSO Webinar: Will your data protection strategy be enough when disaster strikes?

    Speakers: - Paul O’Connor, Engagement leader - Performance Audit Group, Victorian Auditor-General’s Office (VAGO) - Nigel Phair, Managing Director, Centre for Internet Safety - Joshua Stenhouse, Technical Evangelist, Zerto - Anthony Caruana, CSO MC & Moderator

    Play Video

  • 150x50

    CSO Webinar: The Human Factor - Your people are your biggest security weakness

    ​Speakers: David Lacey, Researcher and former CISO Royal Mail David Turner - Global Risk Management Expert Mark Guntrip - Group Manager, Email Protection, Proofpoint

    Play Video

  • 150x50

    CSO Webinar: Current ransomware defences are failing – but machine learning can drive a more proactive solution

    Speakers • Ty Miller, Director, Threat Intelligence • Mark Gregory, Leader, Network Engineering Research Group, RMIT • Jeff Lanza, Retired FBI Agent (USA) • Andy Solterbeck, VP Asia Pacific, Cylance • David Braue, CSO MC/Moderator What to expect: ​Hear from industry experts on the local and global ransomware threat landscape. Explore a new approach to dealing with ransomware using machine-learning techniques and by thinking about the problem in a fundamentally different way. Apply techniques for gathering insight into ransomware behaviour and find out what elements must go into a truly effective ransomware defence. Get a first-hand look at how ransomware actually works in practice, and how machine-learning techniques can pick up on its activities long before your employees do.

    Play Video

  • 150x50

    CSO Webinar: Get real about metadata to avoid a false sense of security

    Speakers: • Anthony Caruana – CSO MC and moderator • Ian Farquhar, Worldwide Virtual Security Team Lead, Gigamon • John Lindsay, Former CTO, iiNet • Skeeve Stevens, Futurist, Future Sumo • David Vaile - Vice chair of APF, Co-Convenor of the Cyberspace Law And Policy Community, UNSW Law Faculty This webinar covers: - A 101 on metadata - what it is and how to use it - Insight into a typical attack, what happens and what we would find when looking into the metadata - How to collect metadata, use this to detect attacks and get greater insight into how you can use this to protect your organisation - Learn how much raw data and metadata to retain and how long for - Get a reality check on how you're using your metadata and if this is enough to secure your organisation

    Play Video

  • 150x50

    CSO Webinar: How banking trojans work and how you can stop them

    CSO Webinar: How banking trojans work and how you can stop them Featuring: • John Baird, Director of Global Technology Production, Deutsche Bank • Samantha Macleod, GM Cyber Security, ME Bank • Sherrod DeGrippo, Director of Emerging Threats, Proofpoint (USA)

    Play Video

More videos

Blog Posts

Market Place