Kremlin insider with an order from Putin: in the US, a Russian hacker was sentenced to 9 years in prison

42-year-old Russian Vladislav Dmitrievich Klyushin was convicted in the United States for nine years. He is imprisoned for computer hacking, wire fraud and securities fraud. This verdict came after a Boston jury found him guilty of the named crimes in February 2023. Writes about it with the BBC.

Photo: IStock

“For more than two years, while thousands of miles from the United States,” prosecutors began petitioning for a sentence, “convicted Vladislav Klyushin led a group of Russian citizens who committed two serious, related, but separate crimes: insider stock trading for $ 93 million (one of the largest schemes ever exposed in the United States) and a sophisticated cyberattack that cost two of its victims more than $8 million.”

In addition to Klyushin, Ivan Sergeevich Ermakov, Nikolai Rumyantsev, Mikhail Vladimirovich Irzak, and Igor Sergeevich Sladkov, who are put on the wanted list, appear in this case.

Ermakov is called by the American authorities a former employee of the Main Intelligence Directorate (GRU) and has already attracted him to the United States three times. He was first detained in Washington in July 2018 in the case of a dozen Russian hackers allegedly linked to the GRU and accused of interfering in the 2016 US presidential election.

On the subject: How Russian oligarchs hide money in Cyprus: US journalists found out a lot of interesting things

In October 2018, Yermakov was arraigned in federal court in Pittsburgh on charges of computer hacking and disinformation operations, including attacks on anti-doping organizations, sports federations and anti-doping campaigners.

Ermakov holds the position of deputy general director of the M-13 company, which belongs to Klyushin, and Rumyantsev is deputy director. While Klyushin and Rumyantsev are Muscovites, Sladkov and Irzak reside in St. Petersburg and interacted with Klyushin through Ermakov, who is a close friend of Klyushin and often travels with him. Prosecutors call Ermakov a professional hacker and point to his IP address in connection with a cyber attack on one of the affected firms, DFIN.

Klyushin's defense, in their arguments about the punishment, is trying to soften his connection with Yermakov. However, prosecutors point out that Ermakov was the only employee of the company who received one of the four Porsche convertibles with the number "M-13" as a gift from Klyushin, as well as an apartment and a loan of one and a half million dollars.

Game on the stock exchange with hacking

According to the Massachusetts federal prosecutor's office, the crimes attributed to Vladislav Dmitrievich Klyushin were committed between July 2018 and September 2020. During this period, he and his accomplices hacked into the computers of two firms, Donnelly Financial (DFIN) and Toppan Merrill, through which public companies regularly submit confidential financial statements to the federal Securities and Exchange Commission.

Then the attackers stole these reports before they were publicly disclosed and used the confidential information taken from there to successfully trade on the exchange. The prosecutor's office characterizes these results as "incredible". It is not surprising that when DFIN and TM closed the vulnerabilities in their computer networks, the scammers stopped making money on the exchange and, when playing, often lost money, in particular, about $200.

Vladislav Klyushin and his Moscow IT company M-13, in which he was a co-founder and head, invested not their own money in the shares, but the funds of three third-party investors, to whom the American prosecutor’s office has no claims. Among the investors are Alexander Borodaev (net profit - $12), Sergey Uryadov ($454) and Boris Varshavsky ($502).

According to prosecutors, Klyushin took half of their profits and earned $11 in the end.

For a long time, the prosecution claimed that Klyushin earned a total of $36,6 million from this scheme. However, two days before the verdict, it told the judge that the defense was able to convince him to lower that amount to $34, and that was the amount the prosecution hoped to confiscate from Klyushin.

In July, prosecutors told the judge that Klyushin's assets were frozen in Cyprus, which were held in two accounts in a financial institution called Otkritie Broker, Ltd. However, according to the prosecution, the amount on these accounts is less than what the prosecutor's office seeks to confiscate from Klyushin.

The defender of the Moscow millionaire Maxim Nemtsev argued that the court should limit the sentence to three years, arguing that Klyushin did not play a key role in the criminal scheme and earned less money than his accomplices Sladkov and Irzak.

According to prosecutors, their profit from the joint scheme actually amounted to about $49,7 million. However, at trial, it was demonstrated that all three worked together because they traded the same stocks at the same time and almost 97% of the time in the same direction.

29 images of Klyushin's yacht worth $3 million were found in Sladkov's data cloud, as well as photographs of Klyushin and Ermakov's trip to a ski resort and the Klyushin family's vacation in the Maldives.

landmark case

The Massachusetts federal prosecutor's office described Klyushin's case as significant and suggested that the judge impose a sentence that included 14 years in prison, three years of public supervision (provided that he remains in the United States after serving his sentence, which is unlikely), a fine of $ 5 thousand, compensation for damage to two victims companies in the amount of $8 and confiscation of frozen assets.

Klyushin was detained at the request of the United States on March 21, 2021 in the Swiss city of Sion, when he arrived there with his family on a private plane and was about to transfer to a helicopter for a trip to the ski resort of Zermatt.

This case caused a great resonance in the American press. Bloomberg, for example, headlined news about Klyushin's extradition to the US in December 2021: "The US caught a Kremlin insider who may have the secrets of a 2016 computer hack."

This refers to the hacking of computers of the US Democratic Party and the leakage of files that were published in the media in order to discredit Hillary Clinton, the then US presidential candidate. The United States blamed Russian intelligence services for the operation.

Klyushin's company M-13, known for its Katyusha program, which monitors media and blogs, is used in the Russian administration, including Russian President Vladimir Putin, who awarded Klyushin the Order of Honor, as well as in the federal structures of Russia.

Klyushin's lawyer in Switzerland, who helped him fight against extradition to the United States, argued in local courts that the case was politically motivated, but was unable to prove his position. Klyushin was extradited to New York on December 18, 2021.

Allegations have appeared in Russian and some American media that Klyushin has Kremlin secrets, and foreign security officials are hoping to be able to extract information from him. However, he refused to cooperate not only with the prosecutor's offer, but also with the recognition deal that most Russian hackers attracted to the US accept.

Klyushin was one of the few federal prisoners who decided to take his case to trial, and the jury found him guilty after hearing a ten-day trial. The prosecutor's office urged the judge to sentence Klyushin to 14 years in prison, emphasizing that harsh punishment was necessary to prevent similar crimes, since his schemes were highly profitable, difficult to detect and practically unpunishable for his accomplices.

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"Cyber ​​fugitives" from justice

The FBI maintains a list of 133 most wanted cybercriminals of the last decade, prosecutors told the judge. All but one operated outside the United States.

Among the countries from which the majority of “cyber fugitives from justice” originate, Russia is in the lead with 44 cases. In second place is Iran (42), in third is China (29).

“There are so many of them in these countries because a lot of cybercrimes are committed there,” the prosecutor’s office explained. — Russia, China and Iran, far ahead of other countries on this list, do not respond to grand jury subpoenas and rarely, if ever, provide forensic information that would help identify cybercriminals. In addition, they do not extradite their citizens, so the prosecutor’s office can only hope that the person involved in it will go abroad.”

Under such conditions, only the prospect of a long prison term can scare off the next potential hacker, or at least make him think: “What is the use of a large profit from my cybercrimes if I can’t go anywhere and spend it without being extradited to the USA?”

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