Indictments in Massive Hacking Case

Wednesday, November 11, 2015 @ 02:11 PM gHale

Three men are facing charges related to stealing customer data from U.S. financial institutions, brokerage firm and publishers.

Federal prosecutors Tuesday unsealed a superseding indictment charging Gery Shalon, Joshua Samuel Aaron and Ziv Orenstein with orchestrating the massive computer hacking crimes.

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The feds said Shalon also orchestrated computer network hacks and cyber attacks in furtherance of other major criminal schemes, including unlawful Internet casinos and illicit payment processors.

Shalon also owned and controlled an illegal U.S.-based Bitcoin exchange known as, prosecutors said. Police in Israel arrested Shalon and Orenstein in July on an indictment charging them with underlying securities fraud, and they remain in custody in Israel pending extradition.

The U.S. Attorney’s Office will seek their extradition to stand trial in the United States. Aaron remains at large.

In addition, a separate indictment ended up unsealed charging Anthony R. Murgio with operating in the United States, and related crimes.

Hacking Business Model
“The charged crimes showcase a brave new world of hacking for profit. It is no longer hacking merely for a quick payout, but hacking to support a diversified criminal conglomerate,” said U.S. Attorney Bharara. “This was hacking as a business model. The alleged conduct also signals the next frontier in securities fraud – sophisticated hacking to steal nonpublic information, something the defendants discussed for the next stage of their sprawling enterprise. Fueled by their hacking, the defendants’ criminal schemes allegedly generated hundreds of millions of dollars in illicit proceeds. Even the most sophisticated companies – like those victimized by the hacks in this case – have to appreciate the limits of their ability to uncover the full scope of any cyber-intrusion and to stop the perpetrators before they strike again. If they have been hacked, most likely others have been as well, and even more will be. The best bet to identify, stop and punish cybercriminals is to work closely, and early, with law enforcement. That happened here, and today’s charges are proof of that.”

From approximately 2012 to mid-2015, Shalon, working with Aaron and others, orchestrated the U.S. Financial Sector Hacks, stealing personal information of over 100 million customers of the victim companies, according to the allegations contained in the superseding indictment. Among these, their network intrusion at one bank (Victim-1) resulted in the theft of personal information of over 80 million Victim-1 customers, making it the largest theft of customer data from a U.S. financial institution in history. Shalon, Aaron and their co-conspirators engaged in these crimes in furtherance of other criminal schemes. In particular, in an effort to artificially manipulate the price of certain stocks publicly traded in the United States, Shalon and his co-conspirators sought to market the stocks, in a deceptive and misleading manner, to customers of the victim companies whose contact information they had stolen in the intrusions.

In addition to directing the U.S. Financial Sector Hacks, Shalon directed computer network hacks and cyberattacks against numerous companies outside of the financial sector, prosecutors said. Shalon and his co-conspirators engaged in these crimes in furtherance of large-scale criminal businesses that Shalon and Orenstein operated in the United States and other countries.

Between approximately 2007 and July 2015, Shalon owned and operated unlawful Internet gambling businesses in the United States and abroad; owned and operated multinational payment processors for illegal pharmaceutical suppliers, counterfeit and malicious software (malware) distributors, and unlawful internet casinos; and owned and controlled, an illegal U.S.-based Bitcoin exchange that operated in violation of federal anti-money laundering laws, prosecutors said. Nearly all of these schemes, like Shalon’s securities market manipulation schemes, relied for their success on computer hacking and other cybercrimes committed by Shalon and his co-conspirators.

Through their criminal schemes, between in or about 2007 and in or about July 2015, Shalon and his co-conspirators earned hundreds of millions of dollars in illicit proceeds, of which Shalon concealed at least $100 million in Swiss and other bank accounts, prosecutors said.

Shalon, Aaron, Orenstein and their co-conspirators operated their criminal schemes, and laundered their criminal proceeds, through at least 75 shell companies and bank and brokerage accounts around the world, prosecutors said. The defendants controlled these companies and accounts using aliases, and by fraudulently using 200 purported identification documents, including over 30 false passports purported to come from the United States and at least 16 other countries.